2553 Instructions for Form 2553

Instructions for Form 2553
(Rev. December 2013)

Department of the Treasury
Internal Revenue Service

Election by a Small Business Corporation
Section references are to the Internal Revenue Code unless
otherwise noted.

Future Developments

For the latest information about developments related to
Form 2553 and its instructions, such as legislation enacted
after they were published, go to www.irs.gov/form2553.

What's New

New simplified methods for a corporation (entity) to request
relief for a late S corporation election, ESBT election, QSST
election, or corporate classification election are in effect. See
Relief for Late Elections.

General Instructions
Purpose of Form

A corporation or other entity eligible to elect to be treated as
a corporation must use Form 2553 to make an election under
section 1362(a) to be an S corporation. An entity eligible to
elect to be treated as a corporation that meets certain tests
discussed below will be treated as a corporation as of the
effective date of the S corporation election and does not
need to file Form 8832, Entity Classification Election.
The income of an S corporation generally is taxed to the
shareholders of the corporation rather than to the corporation
itself. However, an S corporation may still owe tax on certain
income. For details, see Tax and Payments in the
Instructions for Form 1120S.

Who May Elect

A corporation or other entity eligible to elect to be treated as
a corporation may elect to be an S corporation only if it meets
all the following tests.
1. It is (a) a domestic corporation, or (b) a domestic entity
eligible to elect to be treated as a corporation, that timely files
Form 2553 and meets all the other tests listed below. If Form
2553 is not timely filed, see Relief for Late Elections, later.
2. It has no more than 100 shareholders. You can treat
an individual and his or her spouse (and their estates) as one
shareholder for this test. You can also treat all members of a
family (as defined in section 1361(c)(1)(B)) and their estates
as one shareholder for this test. For additional situations in
which certain entities will be treated as members of a family,
see Regulations section 1.1361-1(e)(3)(ii). All others are
treated as separate shareholders. For details, see section
1361(c)(1).
3. Its only shareholders are individuals, estates, exempt
organizations described in section 401(a) or 501(c)(3), or
certain trusts described in section 1361(c)(2)(A).
For information about the section 1361(d)(2) election to be
a qualified subchapter S trust (QSST), see the instructions
for Part III. For information about the section 1361(e)(3)
election to be an electing small business trust (ESBT), see
Regulations section 1.1361-1(m). For guidance on how to
convert a QSST to an ESBT, see Regulations section

Jan 24, 2014

1.1361-1(j)(12). If these elections were not timely made, see
Rev. Proc. 2013-30, 2013-36 I.R.B. 173, available at
www.irs.gov/irb/2013-36_IRB/ar12.html.
4. It has no nonresident alien shareholders.
5. It has only one class of stock (disregarding differences
in voting rights). Generally, a corporation is treated as having
only one class of stock if all outstanding shares of the
corporation's stock confer identical rights to distribution and
liquidation proceeds. See Regulations section 1.1361-1(l) for
details.
6. It is not one of the following ineligible corporations.
a. A bank or thrift institution that uses the reserve method
of accounting for bad debts under section 585.
b. An insurance company subject to tax under
subchapter L of the Code.
c. A corporation that has elected to be treated as a
possessions corporation under section 936.
d. A domestic international sales corporation (DISC) or
former DISC.
7. It has or will adopt or change to one of the following tax
years.
a. A tax year ending December 31.
b. A natural business year.
c. An ownership tax year.
d. A tax year elected under section 444.
e. A 52-53-week tax year ending with reference to a year
listed above.
f. Any other tax year (including a 52-53-week tax year)
for which the corporation establishes a business purpose.
For details on making a section 444 election or requesting
a natural business, ownership, or other business purpose tax
year, see the instructions for Part II.
8. Each shareholder consents as explained in the
instructions for column K.
See sections 1361, 1362, and 1378, and their related
regulations for additional information on the above tests.
A parent S corporation can elect to treat an eligible wholly
owned subsidiary as a qualified subchapter S subsidiary. If
the election is made, the subsidiary's assets, liabilities, and
items of income, deduction, and credit generally are treated
as those of the parent. For details, see Form 8869, Qualified
Subchapter S Subsidiary Election.

When To Make the Election

Complete and file Form 2553:
No more than two months and 15 days after the beginning
of the tax year the election is to take effect, or
At any time during the tax year preceding the tax year it is
to take effect.
For this purpose, the 2-month period begins on the day of
the month the tax year begins and ends with the close of the
day before the numerically corresponding day of the second
calendar month following that month. If there is no

Cat. No. 49978N

2. The corporation fails to qualify as an S corporation
(see Who May Elect, earlier) on the effective date entered on
line E of Form 2553 solely because Form 2553 was not filed
by the due date (see When To Make the Election, earlier);
3. The corporation has reasonable cause for its failure to
timely file Form 2553 and has acted diligently to correct the
mistake upon discovery of its failure to timely file Form 2553;
4. Form 2553 will be filed within 3 years and 75 days of
the date entered on line E of Form 2553; and
5. A corporation that meets requirements (1) through (4)
must also be able to provide statements from all
shareholders who were shareholders during the period
between the date entered on line E of Form 2553 and the
date the completed Form 2553 is filed stating that they have
reported their income on all affected returns consistent with
the S corporation election for the year the election should
have been made and all subsequent years. Completion of
Form 2553, Part I, column K, Shareholder's Consent
Statement (or similar document attached to Form 2553), will
meet this requirement; or
6. A corporation that meets requirements (1) through (3)
but not requirement (4) can still request relief for a late
election on Form 2553 if the following statements are true.
a. The corporation and all its shareholders reported their
income consistent with S corporation status for the year the S
corporation election should have been made, and for every
subsequent tax year (if any);
b. At least 6 months have elapsed since the date on
which the corporation filed its tax return for the first year the
corporation intended to be an S corporation; and
c. Neither the corporation nor any of its shareholders was
notified by the IRS of any problem regarding the S
corporation status within 6 months of the date on which the
Form 1120S for the first year was timely filed.

corresponding day, use the close of the last day of the
calendar month.
Example 1. No prior tax year. A calendar year small
business corporation begins its first tax year on January 7.
The 2-month period ends March 6 and 15 days after that is
March 21. To be an S corporation beginning with its first tax
year, the corporation must file Form 2553 during the period
that begins January 7 and ends March 21. Because the
corporation had no prior tax year, an election made before
January 7 will not be valid.
Example 2. Prior tax year. A calendar year small business
corporation has been filing Form 1120 as a C corporation but
wishes to make an S election for its next tax year beginning
January 1. The 2-month period ends February 28 (29 in leap
years) and 15 days after that is March 15. To be an S
corporation beginning with its next tax year, the corporation
must file Form 2553 during the period that begins the first day
(January 1) of its last year as a C corporation and ends
March 15th of the year it wishes to be an S corporation.
Because the corporation had a prior tax year, it can make the
election at any time during that prior tax year.
Example 3. Tax year less than 2 1/2 months. A calendar
year small business corporation begins its first tax year on
November 8. The 2-month period ends January 7 and 15
days after that is January 22. To be an S corporation
beginning with its short tax year, the corporation must file
Form 2553 during the period that begins November 8 and
ends January 22. Because the corporation had no prior tax
year, an election made before November 8 will not be valid.

Relief for Late Elections

The following two sections discuss relief for late S
corporation elections and relief for late S corporation and
entity classification elections for the same entity. For
supplemental procedural requirements when seeking relief
for multiple late elections, see Rev. Proc. 2013-30, section
4.04.

To request relief for a late election when the above
requirements are not met, the corporation generally must
request a private letter ruling and pay a user fee in
accordance with Rev. Proc. 2014-1, 2014-1 I.R.B. 1 (or its
successor).

When filing Form 2553 for a late S corporation election,
the corporation (entity) must write in the top margin of the
first page of Form 2553 “FILED PURSUANT TO REV. PROC.
2013-30.” Also, if the late election is made by attaching Form
2553 to Form 1120S, the corporation (entity) must write in
the top margin of the first page of Form 1120S “INCLUDES
LATE ELECTION(S) FILED PURSUANT TO REV. PROC.
2013-30.”

Relief for a Late S Corporation Election Filed By
an Entity Eligible To Elect To Be Treated as a
Corporation
A late election to be an S corporation and a late entity
classification election for the same entity may be available if
the entity can show that the failure to file Form 2553 on time
was due to reasonable cause. Relief must be requested
within 3 years and 75 days of the effective date entered on
line E of Form 2553.

The election can be filed with the current Form 1120S if all
earlier Forms 1120S have been filed. The election can be
attached to the first Form 1120S for the year including the
effective date if filed simultaneously with any other delinquent
Forms 1120S. Form 2553 can also be filed separately.

To request relief for a late election, an entity that meets
the following requirements can explain the reasonable cause
in the designated space on page 1 of Form 2553.
1. The entity is an eligible entity as defined in Regulations
section 301.7701-3(a) (see Purpose of Form in the Form
8832 instructions).
2. The entity intended to be classified as an S
corporation as of the date entered on line E of Form 2553.
3. Form 2553 will be filed within 3 years and 75 days of
the date entered on line E of Form 2553.
4. The entity failed to qualify as a corporation solely
because Form 8832 was not timely filed under Regulations
section 301.7701-3(c)(1)(i) (see When To File in the Form

Relief for a Late S Corporation Election Filed by
a Corporation

A late election to be an S corporation generally is effective for
the tax year following the tax year beginning on the date
entered on line E of Form 2553. However, relief for a late
election may be available if the corporation can show that the
failure to file on time was due to reasonable cause.
To request relief for a late election, a corporation that
meets the following requirements can explain the reasonable
cause in the designated space on page 1 of Form 2553.
1. The corporation intended to be classified as an S
corporation as of the date entered on line E of Form 2553;
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8832 instructions), or Form 8832 was not deemed to have
been filed under Regulations section 301.7701-3(c)(1)(v)(C)
(see Who Must File in the Form 8832 instructions).
5. The entity fails to qualify as an S corporation (see Who
May Elect, earlier) on the effective date entered on line E of
Form 2553 because Form 2553 was not filed by the due date
(see When To Make the Election, earlier).
6. The entity either:
a. Timely filed all Forms 1120S consistent with its
requested classification as an S corporation, or
b. Did not file Form 1120S because the due date for the
first year's Form 1120S has not passed.
7. The entity has reasonable cause for its failure to timely
file Form 2553 and has acted diligently to correct the mistake
upon discovery of its failure to timely file Form 2553.
8. The S corporation can provide statements from all
shareholders who were shareholders during the period
between the date entered on line E of Form 2553 and the
date the completed Form 2553 is filed stating that they have
reported their income on all affected returns consistent with
the S corporation election for the year the election should
have been made and all subsequent years. Completion of
Form 2553, Part I, column K, Shareholder's Consent
Statement (or similar document attached to Form 2553), will
meet this requirement.

If the corporation's principal
business, office, or agency is
located in:

Use the following
address or fax number:

Connecticut, Delaware, District of
Columbia, Florida, Georgia,
Illinois, Indiana, Kentucky, Maine,
Maryland, Massachusetts,
Michigan, New Hampshire, New
Jersey, New York, North
Carolina, Ohio, Pennsylvania,
Rhode Island, South Carolina,
Tennessee, Vermont, Virginia,
West Virginia, Wisconsin

Department of the
Treasury
Internal Revenue Service
Center
Cincinnati, OH 45999
Fax: (859) 669-5748

Alabama, Alaska, Arizona,
Arkansas, California, Colorado,
Hawaii, Idaho, Iowa, Kansas,
Louisiana, Minnesota,
Mississippi, Missouri, Montana,
Nebraska, Nevada, New Mexico,
North Dakota, Oklahoma,
Oregon, South Dakota, Texas,
Utah, Washington, Wyoming

Department of the
Treasury
Internal Revenue Service
Center
Ogden, UT 84201
Fax: (801) 620-7116

Acceptance or Nonacceptance of
Election

To request relief for a late election when the above
requirements are not met, the entity generally must request a
private letter ruling and pay a user fee in accordance with
Rev. Proc. 2014-1, 2014-1 I.R.B. 1 (or its successor).

The service center will notify the corporation if its election is
accepted and when it will take effect. The corporation will
also be notified if its election is not accepted. The corporation
should generally receive a determination on its election within
60 days after it has filed Form 2553. If box Q1 in Part II is
checked, the corporation will receive a ruling letter from the
IRS that either approves or denies the selected tax year.
When box Q1 is checked, it will generally take an additional
90 days for the Form 2553 to be accepted.
Care should be exercised to ensure that the IRS receives
the election. If the corporation is not notified of acceptance or
nonacceptance of its election within 2 months of the date of
filing (date faxed or mailed), or within 5 months if box Q1 is
checked, take follow-up action by calling 1-800-829-4933.
If the IRS questions whether Form 2553 was filed, an
acceptable proof of filing is:
A certified or registered mail receipt (timely postmarked)
from the U.S. Postal Service, or its equivalent from a
designated private delivery service (see Notice 2004-83,
2004-52 I.R.B. 1030, available at
www.irs.gov/irb/2004-52_IRB/ar10.html (or its successor));
Form 2553 with an accepted stamp;
Form 2553 with a stamped IRS received date; or
An IRS letter stating that Form 2553 has been accepted.

Where To File

Generally, send the original election (no photocopies) or fax it
to the Internal Revenue Service Center listed below. If the
corporation files this election by fax, keep the original Form
2553 with the corporation's permanent records. However,
certain late elections can be filed attached to Form 1120S.
See Relief for Late Elections, earlier.
For the latest mailing address of Form 2553, go to IRS.gov
and enter "Where to file Form 2553" in the search box.

Do not file Form 1120S for any tax year before the
year the election takes effect. If the corporation is
CAUTION
now required to file Form 1120, U.S. Corporation
Income Tax Return, or any other applicable tax return,
continue filing it until the election takes effect.

!

End of Election

Once the election is made, it stays in effect until it is
terminated or revoked. IRS consent generally is required for
another election by the corporation (or a successor
corporation) on Form 2553 for any tax year before the 5th tax
year after the first tax year in which the termination or
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beginning date of the tax year following this short tax year
and file Form 1128, Application To Adopt, Change, or Retain
a Tax Year. If this change qualifies as an automatic approval
request (Form 1128, Part II), file Form 1128 as an attachment
to Form 2553. If this change qualifies as a ruling request
(Form 1128, Part III), file Form 1128 separately. If filing Form
1128, enter “Form 1128” on the dotted line to the left of the
entry space for item E.

revocation took effect. See Regulations section 1.1362-5 for
details.

Specific Instructions
Part I
Name and Address

Item F

Enter the corporation's true name as stated in the corporate
charter or other legal document creating it. If the
corporation's mailing address is the same as someone
else's, such as a shareholder's, enter “C/O” and this person's
name following the name of the corporation. Include the
suite, room, or other unit number after the street address. If
the Post Office does not deliver to the street address and the
corporation has a P.O. box, show the box number instead of
the street address. If the corporation changed its name or
address after applying for its employer identification number,
be sure to check the box in item D of Part I.

Check the box that corresponds with the S corporation's
selected tax year. If box (2) or (4) is checked, provide the
additional information about the tax year, and complete Part
II of the form.

Signature

Form 2553 must be signed and dated by the president, vice
president, treasurer, assistant treasurer, chief accounting
officer, or any other corporate officer (such as tax officer)
authorized to sign.

Item A. Employer Identification Number (EIN)

If Form 2553 is not signed, it will not be considered timely
filed.

Enter the corporation's EIN. If the corporation does not have
an EIN, it must apply for one. An EIN can be applied for:
Online–Click on the Employer ID Numbers (EINs) link at
www.irs.gov/businesses/small. The EIN is issued
immediately once the application information is validated.
By telephone at 1-800-829-4933, or at 1-800-829-4059 for
individuals who are deaf, hard of hearing, or have a speech
disability and who have access to TTY/TDD equipment.
By mailing or faxing Form SS-4, Application for Employer
Identification Number.

Column J

Enter the name and address of each shareholder or former
shareholder required to consent to the election. If stock of the
corporation is held by a nominee, guardian, custodian, or an
agent, enter the name and address of the person for whom
the stock is held. If a single member limited liability company
(LLC) owns stock in the corporation, and the LLC is treated
as a disregarded entity for federal income tax purposes,
enter the owner's name and address. The owner must be
eligible to be an S corporation shareholder.

If the corporation has not received its EIN by the time the
return is due, enter “Applied For” and the date the
corporation applied in the space for the EIN. For more
details, see the Instructions for Form SS-4.

For an election filed before the effective date entered for
item E, only shareholders who own stock on the day the
election is made need to consent to the election.

Item E. Effective Date of Election

For an election filed on or after the effective date entered
for item E, all shareholders or former shareholders who
owned stock at any time during the period beginning on the
effective date entered for item E and ending on the day the
election is made must consent to the election.

Form 2553 generally must be filed no later than 2
TIP months and 15 days after the date entered for item
E. For details and exceptions, see When To Make
the Election, earlier.
A corporation (or entity eligible to elect to be treated as a
corporation) making the election effective for its first tax year
in existence should enter the earliest of the following dates:
The date the corporation (entity) first had shareholders
(owners),
The date the corporation (entity) first had assets, or
The date the corporation (entity) began doing business.

If the corporation timely filed an election, but one or more
shareholders did not timely file a consent, see Regulations
section 1.1362-6(b)(3)(iii). If the shareholder was a
community property spouse who was a shareholder solely
because of a state community property law, see Rev. Proc.
2004-35, 2004-23 I.R.B. 1029, available at
www.irs.gov/irb/2004-23_IRB/ar11.html.

When the corporation (entity) is making the election
for its first tax year in existence, it will usually enter
CAUTION
the beginning date of a tax year that begins on a
date other than January 1.

Column K. Shareholder's Consent Statement

!

Each shareholder consents by signing and dating either in
column K or on a separate consent statement. The following
special rules apply in determining who must sign.
If an individual and his or her spouse have a community
interest in the stock or in the income from it, both must
consent.
Each tenant in common, joint tenant, and tenant by the
entirety must consent.
A minor's consent is made by the minor, legal
representative of the minor, or a natural or adoptive parent of
the minor if no legal representative has been appointed.
The consent of an estate is made by the executor or
administrator.

A corporation (entity) not making the election for its first
tax year in existence that is keeping its current tax year
should enter the beginning date of the first tax year for which
it wants the election to be effective.
A corporation (entity) not making the election for its first
tax year in existence that is changing its tax year and wants
to be an S corporation for the short tax year needed to switch
tax years should enter the beginning date of the short tax
year. If the corporation (entity) does not want to be an S
corporation for this short tax year, it should enter the
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If your business purpose is based on one of the natural
business year tests provided in section 5.03 of Rev. Proc.
2002-39, identify which test you are using (the 25% gross
receipts, annual business cycle, or seasonal business test).
For the 25% gross receipts test, provide a schedule showing
the amount of gross receipts for each month for the most
recent 47 months. For either the annual business cycle or
seasonal business test, provide the gross receipts from sales
and services (and inventory costs, if applicable) for each
month of the short period, if any, and the three immediately
preceding tax years. If the corporation has been in existence
for less than three tax years, submit figures for the period of
existence.

The consent of an electing small business trust (ESBT) is
made by the trustee and, if a grantor trust, the deemed
owner. See Regulations section 1.1362-6(b)(2)(iv) for details.
If the stock is owned by a qualified subchapter S trust
(QSST), the deemed owner of the trust must consent.
If the stock is owned by a trust (other than an ESBT or
QSST), the person treated as the shareholder by section
1361(c)(2)(B) must consent.
Continuation sheet or separate consent statement. If
you need a continuation sheet or use a separate consent
statement, attach it to Form 2553. It must contain the name,
address, and EIN of the corporation and the information
requested in columns J through N of Part I.

If you check box Q1, you will be charged a user fee of
$2,700 (subject to change by Rev. Proc. 2015-1 or its
successor). Do not pay the fee when filing Form 2553. The
service center will send Form 2553 to the IRS in Washington,
DC, who, in turn, will notify the corporation that the fee is due.

Column L

Enter the number of shares of stock each shareholder owns
on the date the election is filed and the date(s) the stock was
acquired. Enter -0- for any former shareholders listed in
column J. An entity without stock, such as a limited liability
company (LLC), should enter the percentage of ownership
and date(s) acquired.

Box Q2

If the corporation makes a back-up section 444 election for
which it is qualified, then the section 444 election will take
effect in the event the business purpose request is not
approved. In some cases, the tax year requested under the
back-up section 444 election may be different than the tax
year requested under business purpose. See Form 8716,
Election To Have a Tax Year Other Than a Required Tax
Year, for details on making a back-up section 444 election.

Column M

Enter the social security number of each individual listed in
column J. Enter the EIN of each estate, qualified trust, or
exempt organization.

Column N

Enter the month and day that each shareholder's tax year
ends. If a shareholder is changing his or her tax year, enter
the tax year the shareholder is changing to, and attach an
explanation indicating the present tax year and the basis for
the change (for example, an automatic revenue procedure or
a letter ruling request).

Boxes Q3 and R2

If the corporation is not qualified to make the section 444
election after making the item Q2 back-up section 444
election or indicating its intention to make the election in item
R1, and therefore it later files a calendar year return, it should
write “Section 444 Election Not Made” in the top left corner of
the first calendar year Form 1120S it files.

Part II

Part III

Complete Part II if you checked box (2) or (4) in Part I, Item F.

In Part III, the income beneficiary (or legal representative) of
certain qualified subchapter S trusts (QSSTs) may make the
QSST election required by section 1361(d)(2). Part III may be
used to make the QSST election only if corporate stock has
been transferred to the trust on or before the date on which
the corporation makes its election to be an S corporation.
However, a statement can be used instead of Part III to make
the election. If there was an inadvertent failure to timely file a
QSST election, see the relief provisions under Rev. Proc.
2013-30.

Note. Corporations cannot obtain automatic approval of a
fiscal year under the natural business year (box P1) or
ownership tax year (box P2) provisions if they are under
examination, before an appeals (area) office, or before a
federal court without meeting certain conditions and
attaching a statement to the application. For details, see
section 7.03 of Rev. Proc. 2006-46, 2006-45 I.R.B. 859,
available at www.irs.gov/irb/2006-45_IRB/ar14.html.

Box P1

A corporation that does not have a 47-month period of gross
receipts cannot automatically establish a natural business
year.

Note. Use Part III only if you make the election in Part I.
Form 2553 cannot be filed with only Part III completed.
The deemed owner of the QSST must also consent to the
S corporation election in column K of Form 2553.

Box Q1

For examples of an acceptable business purpose for
requesting a fiscal tax year, see section 5.02 of Rev. Proc.
2002-39, 2002-22 I.R.B. 1046, and Rev. Rul. 87-57, 1987-2
C.B. 117.

Part IV

The representations listed in Part IV must be attached to a
late corporate classification election intended to be effective
on the same date that a late S corporation election was
intended to be effective. For more information on making
these late elections, see Relief for a Late S Corporation
Election Filed By an Entity Eligible To Elect To Be Treated as
a Corporation, earlier.

Attach a statement showing the relevant facts and
circumstances to establish a business purpose for the
requested fiscal year. For details on what is sufficient to
establish a business purpose, see section 5.02 of Rev. Proc.
2002-39.

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