This sixth installment of my multi-part series on Subchapter S is focused on the revocation of an S corporation election.[1] While the rules relating to revocation are fairly straightforward, there are a few nuances that may create traps for unwary taxpayers and their tax advisers.
Background
An S election may be revoked with the consent of greater than 50 percent of the shares held on the date of revocation.[2]
Revocation of an S election does not require the Secretary’s consent. Rather, to revoke an S election, the corporation simply must file a written statement with the Service Center where it files its IRS Form 1120S. The statement must include: