Re: switch LLC tax entity from partnership to S-Corp

You would have to first file an entity election on Form 8832 to elect to
have the LLC treated as an association taxable as a corporation, you would
then file a Form 2553 electing to treat the LLC/corporation as an
S-corporation.

To speed up the process, however, if the LLC otherwise meets all of the
requirements to be an s-corporation (other than being classed as a
corporation), treasury regulations permit a single election to be treated
as an S-corporation to be made, with the collateral effect that the
electing entity will be deemed to have made a simultaneous election to be
classified as a corporation. See Treas. Reg. 301.7701-3(c)(v)(C).

In terms of how far back you can push the effective date of the election,
in this case you've waited too long; the effective date of the election
cannot be more than 75 days prior to the date on which the election is
filed, see Treas. Reg. 301.7701-3(c)(1)(iii). January 1, 2007 is 115 days
prior to today, which is too far back; the farthest back you could go, if
you filed the election today, would be Feb. 10th, 2007.

You could, however, push the effective date of the election up to Jan 1,
2008; Treas. Reg. 301.7701-3(c)(1)(iii) permits the effective date of an
election to be up to 12 months after the date on which the election is
filed.

If you don't specify a date on the election, the effective date will be
the date of filing. See Id.

The primary restriction on doing this is whether or not the LLC made an
entity classification election within the preceding 60 months, other than
an election that was to be effective as of the date of formation of the
LLC. See IRS Form 8832 and the instructions thereto.

Other than that, if the LLC is a single member LLC that accepted the
default status as a disregarded entity (either by default or by filing a
protective Form 8832 electing disregarded entity status), the effect of
the elections above will be that you will be treated as having formed a
new corporation on the effective date of the election, contributed all of
the assets to that corporation in exchange for its stock, and then made an
election to treat it as an s-corporation.

If the LLC has more than one member, and accepted the default status as
partnership, then as a result of making the above elections, the
partnership will be deemed to have contributed all of its assets to the
newly formed corporation in exchange for all of the corporation's stock,
and immediately thereafter the partnership will be treated as liquidating
and distibuting the stock of the corporation to the partners. See Treas.
Reg. 301.7701-3(g)(1).

In particular, the partnership will be treated as having liquidated for
all of the various Code provisions, including subchapter K, which means
that you need to go through a liquidation analysis to see if any untoward
tax consequences might result. See Treas. Reg. 301.7701-3(g)(2)(i).

.

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