This sixth installment of my multi-part series on Subchapter S is focused on the revocation of an S corporation election.[1] While the rules relating to revocation are fairly straightforward, there are a few nuances that may create traps for unwary taxpayers and their tax advisers.
Background
An S election may be revoked with the consent of greater than 50 percent of the shares held on the date of revocation.[2]
Revocation of an S election does not require the Secretary’s consent. Rather, to revoke an S election, the corporation simply must file a written statement with the Service Center where it files its IRS Form 1120S. The statement must include:
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Larry J. Brant
Editor
Larry J. Brant is a Shareholder and the Chair of the Tax & Benefits practice group at Foster Garvey, a law firm based out of the Pacific Northwest, with offices in Seattle, Washington; Portland, Oregon; Washington, D.C.; New York, New York, Spokane, Washington; and Tulsa, Oklahoma. Mr. Brant is licensed to practice in Oregon and Washington. His practice focuses on tax, tax controversy and business transactions. Mr. Brant is a past Chair of the Oregon State Bar Taxation Section. He was the long-term Chair of the Oregon Tax Institute, and is currently a member of the Board of Directors of the Portland Tax Forum. Mr. Brant has served as an adjunct professor, teaching corporate taxation, at Northwestern School of Law, Lewis and Clark College. He is a frequent lecturer at local, regional and national tax and business conferences for CPAs and attorneys. Mr. Brant is an Expert Contributor to Thomson Reuters Checkpoint Catalyst. He is a Fellow in the American College of Tax Counsel. Mr. Brant publishes articles on numerous income tax issues, including Taxation of S corporations, Taxation of C corporations, Reasonable Compensation, Circular 230, Worker Classification, IRC Section 1031 Exchanges, Choice of Entity, Entity Tax Classification, and State and Local Taxation. Since 2019, he has been a multiple-time honoree of the JD Supra Readers’ Choice Awards for Tax, recognizing him as a Top Author for thought leadership and reader engagement on its platform. Mr. Brant was the 2015 Recipient of the Oregon State Bar Tax Section Award of Merit.
