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by Drew Porter, CPA
I started a corporation in late December 2017 with the intention of electing it as a chapter S Corp. I got my EIN number dated 1/2/2018. So do I need to file an 1120 with no business activity for the few days in December 2017?
The quick answer is yes. A corporation must file a tax return for every year of its existence. Absent making an S-election for 2017, you would need to file Form 1120 for 2017 because the corporation was formed in 2017.
You may also want to consider filing an 1120S instead. You can do this two different ways. If you are still within the filing window for making your initial S-election, you should complete Form 2553 (the form used to make the S-election) and file it with the IRS for your 2017 tax year. Form 2553 must be filed within two months and 15 days after the first day of your 2017 tax year.
Even if you’ve missed the window for making the initial election, you can still file an 1120S and include your Form 2553 with your initial return, along with an explanation of why it was late. It may be beneficial to file the S-election for 2017 to possibly enable the shareholders to take taxable losses on their personal returns for 2017.
There are many different laws and regulations that come into play in this situation, so it would be highly advisable to consult with a CPA for assistance in making the S-election and filing the initial returns.
Drew Porter, CPA, is a partner in the Lafayette, California, firm of Comnys, Smith, McCleary & Deaver LLP. You can reach him at (925) 299-1040 or firstname.lastname@example.org.
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