Converting from S Corp to C Corp (and Vice Versa)
Things to Consider
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What does it take to convert from S to C corporation status?The decision to become an S corporation is nothing more than a tax election. Therefore, if the entity meets the requirements to be an S corporation, the act of converting to a C corporation is very simple. To begin the conversion process, more than 50% of the corporate shareholders must vote to make a Subchapter S election. The S corporation board must then vote to approve the decision to convert to a C corporation. The corporation must then execute the appropriate IRS form.
- Note: An S corporation can lose its S election status by failing to adhere to S corporation requirements. If so, the C corporation cannot return to S status within a 5-year period without permission from the IRS.