I launched a company in 2010 as an LLC taxed as a C Corporation. We generated $250,000 in revenue and about $50,000 in net income. We are now considering transitioning to an S Corporation to avoid double taxation. Do you recommend this and if so, what are the necessary steps to transfer from a C Corp to an S Corp for tax purposes?

ANSWER

Expert Todd Alexander's Answer:

 To convert from a C corporation to a S corporation you must file a Form 2553 by the 15th day of the third month of the taxable year of the election with the IRS.  As to my recommendation, more facts are needed.  This decision needs analysis and is not determined by the issue of double taxation alone.

Todd Alexander, CPA

California

20 yrs experience

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