LLC conversion to SCorp - Spidell

LLC conversion to SCorp

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Message Board LLC conversion to SCorp

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    • #199422
      Jeanette Anderson
      Participant

      My CA resident client created an LLC in Alaska (on advice of a business consultant) and filed a 2018 Form 1065 with the IRS and Form 568 in CA.  In October 2019, they filed  Articles of Incorporation with Statement of Conversion – CA LLC to CA Stock Corporation with the CA Sec. of State.  The CA SOS now lists the entity as XXXX, Inc. The EIN for the entity did not change. They intended for the corporation to be an SCorp effective 1/1/19.  Since the entity has converted to a corporation under state law, is an entity classification election still required to be filed with the IRS (via Form 8832 or 2553) to give the IRS notice that the entity is now a corporation and no longer an LLC?  Or does the entity just have to complete Form 2553 to elect SCorp status (with relief from late election requested)?

    • #199658
      Lynn Freer
      Participant

      If you changed the LLC to a stock corporation, you must make an election for the corporation to be an S corp. The entity classification election would be if you were an LLC and elected for tax purposes to be a corporation. My only question is what happened to the Alaska LLC? Did it get dissolved?

    • #199816
      Jeanette Anderson
      Participant

      Thanks Lynn,

      The owners terminated the LLC in AK.  The AK LLC was never registered in CA,  and they filed the conversion paperwork to convert it a CA Corp.  It was my understanding that with a formless state conversion, it is treated as if the assets and liab of LLC are contributed to corp in exchange for stock.  The stock held by LLC is distributed to owners in a deemed liquidation.  Do two returns for the entity have to be filed for 2019 (one for the LLC that has been liquidated) and one for the new SCorp?  Since both have the same EIN, I was hoping to get late SCorp status so that only the 1120S would be required for 2019.  Just not quite sure how to get that done efficiently.

    • #199869
      Lynn Freer
      Participant

      I think you have until 2020 to make the S election. It sounds like you just formed a corporation in CA but yes you would have 2 returns for 2019, one short year for the LLC and 1 for the S corporation. I’m sorry I’m still confused about how an AK LLC could be converted to a corporation in CA. You might need to talk to the attorney who did the conversion

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