Posted by Diane (TX) on January 09, 2003 at 19:52:52:
Yes and no. You can skip the initial filing, since it will be under the income filing limits. All you’ll do by filing is generate a loss carryforward which can only be used by a C corp.
You can’t deduct the $400 in 2002 expenses in 2003. (Expenses are deductible in the year paid, and income is taxable in the year received.) However, you could probably call these “start-up” expenses and amortize over 60 months. If you wanted to do that, you would have to file a 2002 return to elect to amortize the expenses.
Since you’re talking a relatively small amount, I’d just start in 2003.
Tax question regarding setting up an S-Corp for flips. The 2553 (s-corp. election) was filed after the 75 days. Now the IRS says YES to S status effective 1/1/03. There were NO flips in 2002, no income and about $400 in expenses.
Question - is it possible to just skip initial year (2002) filing and start with 2003 which will include the $400 in expenses from 2002 (and 2003 income & expenses)?
Another option, if you’re still w/in 1 year of the due date to make the S election, is to file another 2553. Get all shareholders to sign it, and write at the top “Filed Pursuant to Rev. Proc. 98-55.” Attach a statement explaining whay the election was not filed timely. The IRS will then notify you of its decision. We’ve done this several times for clients and we’ve had the S election granted every time.