"Vincent Gambini" <lawyer5[at]hotmail.com> wrote:

- quote -

What really threw me was when looking at this the IRS forms
do seem to say I file the 8832 then the 2553, but on the
2553, item "L" it asks for the number of "stock" shares
owed. With an LLC, members typically own interest, not
shares. My first impression is to just put "100%" in this
box form a single member LLC seeking S-Corp status.
Wouldn't that seem reasonable?

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Allan Martin wrote:

- quote -

If your argument is that it is not stock merely because it
is not labeled as such and therefore cannot be considered
stock under federal law, I would disagree. Initially, I
would point out that if that were true across federal tax
law, then Regulation 1.1361-1(l)(4) would be invalid (it
defines certain items as being considered "stock" for these
purposes).

Assuming, therefore, that the ownership interests are
treated as "stock" under check the box (and if they aren't,
a lot of corporate tax provisions become difficult to deal
with) then you look at Regulation 1.1361-1(l)(1) which
provides a function test:

"General rule. A corporation that has more than one class
of stock does not qualify as a small business corporation.
Except as provided in paragraph (l)(4) of this section
(relating to instruments, obligations, or arrangements
treated as a second class of stock), a corporation is
treated as having only one class of stock if all outstanding
shares of stock of the corporation confer identical rights
to distribution and liquidation proceeds. Differences in
voting rights among shares of stock of a corporation are
disregarded in determining whether a corporation has more
than one class of stock. Thus, if all shares of stock of an
S corporation have identical rights to distribution and
liquidation proceeds, the corporation may have voting and
nonvoting common stock, a class of stock that may vote only
on certain issues, irrevocable proxy agreements, or groups
of shares that differ with respect to rights to elect
members of the board of directors."

So, my read is that so long as all interests in the LLC have
identical rights in the areas listed above, you have met the
"one class of stock" test.

--
Ed Zollars, CPA
Phoenix, Arizona

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"Vincent Gambini" <lawyer5[at]hotmail.com> wrote:

- quote -

An LLC is not a corporation and cannot, it would seem to me,
elect S- Corp status.

On the other hand, an LLC has some characteristics of a
corporation and some of a partnership and is, in the
parlance of the code, an association taxable as a
corporation.

In other words, an LLC is a bit of both and can elect to be
taxed as either.

Stu

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"Vincent Gambini" <lawyer5[at]hotmail.com> wrote:

- quote -

First you file the 8832 in Philly to elect corporate status
then the 2253 eith Cincy to elect Sub-S status.

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"Vincent Gambini" <lawyer5[at]hotmail.com> wrote:

- quote -

Yes to both.

Mike Lewis, CPA

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"Vincent Gambini" <lawyer5[at]hotmail.com> wrote:

- quote -

I don't believe the LLC member becomes a shareholder when
the LLC is classified as a corporation. Nor do I believe
ownership would be via one class of stock. I say no.

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Can a single member LLC elect to be treated as a Corporation
for federal tax status rather than a sole-proprietor, then
file an 8832 to seek S-Corp status? Can an LLC even be
considered eligible for S-Corp status?

Thank you.

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