Accounting & Bookkeeping & Small Business Forum

[Guest]

Hi, Thanks in advance for help. I incorporated as a "c" in October of 04, stating my fiscal year end in July. Going to elect for "s" corp status in a few weeks, as I plan on losses the first year of operation. With this scenario . . .

1) I have read an "S" corp has to have the same year end as Calendar year end, so does the "s"- corp election null my July fiscal? ( I file at year end instead )

2) One more question . . .on the expenses incurred by my company as a "c" corp( before the official date of the "ok" from the IRS to confirm s-corp status ), can those expenses still be applied to s-corp losses?

Thanks again for your help. I am a veteran Network Engineer, opening my own biz . . . I can bring up a down network, but book keeping is still very new. working very hard to learn book-keeping a tax practices ( a self-student )

Thanks!

Chris

[Guest]

The regs state that an S Corporation is required to use: 1) a calendar year; 2) a fiscal year that has an established business prupose, or 3) a tax year elected under the provisions of Section 144. So, you may be able to keep the fiscal year, most likely under #2 above. For your second question, if the expenses were incurred after the effective date of the s-corp election (not the date the "ok" is received) then you can apply it to the s-corporation loss. If it occured prior to the effective date, then it does not factor into the loss. By the way, you may want to check out Universal's new Professional Tax Preparer Program to be available in just a couple of weeks.

[Guest]

Fiscal years don't really benefit anyone other than your tax preparer, who gets to prepare your return during the off-season. I'd send in an S-Corp election and request that it be back-dated to the inception of the corporation under the provisions of Revenue Procedure 97-55. That may have been superceded by a newer Rev. Proc, I'm not sure... but the provisions are still there to allow it. Then, just let them reassign you to a calendar year end.

The regs say that you only have 45 days to file the S-Corp election, but the Rev. Proc. allows you to do it all the way until the deadline for the initial return. I have even requested backdating further than that and had it approved.

Oh... and, hire a CPA! This is not something you should try to do on your own. I hire a professional to handle my computer network........ Your CPA should be willing to train you on a bookkeeping program like QuickBooks or Peachtree, and a brief training session will be well worth the money.

Good Luck!