๐’ ๐‚๐Ž๐‘๐๐’ ๐๐Ž๐“ ๐‚๐‡๐€๐๐†๐ˆ๐๐† ๐ญ๐จ ๐‚ ๐‚๐Ž๐‘๐๐’ (๐Ÿ๐Ÿ/๐Ÿ๐ŸŽ/๐Ÿ๐ŸŽ๐Ÿ๐Ÿ—)

Fears that S Corporations would change their status to C Corporations to take advantage of their lower tax rates seem unfounded.

The tax law lowered the tax rate for C Corps that are treated as separate entities for tax purposes and pay corporate taxes. S Corps donโ€™t pay separate taxes like C Corps and their income and expenses flow through to their owners on information returns. So some practitioners envisioned a mass change from S Corp to C Corp.

But the change hasnโ€™t happened. The IRS 2018 Data Book reported approximately 5.1 million S Corp information returns in 2018. And according to the Compliance Data Warehouse (CDW), between January 1, 2018, and December 31, 2018, only 4,850 S Corps terminated their S elections. The CDW does not identify how many of the 4,850 terminations were revocations. But in the unlikely event that all 4,850 terminations were revocations, thatโ€™s approximately 0.0951 percent of the 5.1 million S Corps-Not even 1 %.

See https://www.federalregister.gov/documents/2019/11/07/2019-24098/eligible-terminated-s-corporations

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๐“๐ก๐จ๐ฆ๐š๐ฌ ๐‰๐š๐ฆ๐ž๐ฌ ๐‚๐š๐ซ๐ซ๐จ๐ฅ๐ฅ, ๐.๐‚. ๐ข๐ฌ ๐š ๐ฅ๐š๐ฐ ๐Ÿ๐ข๐ซ๐ฆ ๐Ÿ๐จ๐œ๐ฎ๐ฌ๐ข๐ง๐  ๐จ๐ง ๐Ÿ๐ž๐๐ž๐ซ๐š๐ฅ ๐š๐ง๐ ๐ฌ๐ญ๐š๐ญ๐ž ๐ญ๐š๐ฑ๐ž๐ฌ ๐ญ๐ก๐š๐ญ ๐ฉ๐ซ๐จ๐ฏ๐ข๐๐ž๐ฌ ๐ข๐ง๐๐ข๐ฏ๐ข๐๐ฎ๐š๐ฅ๐ฌ ๐š๐ง๐ ๐›๐ฎ๐ฌ๐ข๐ง๐ž๐ฌ๐ฌ๐ž๐ฌ ๐ฐ๐ข๐ญ๐ก ๐ญ๐š๐ฑ ๐ก๐ž๐ฅ๐ฉ ๐š๐ง๐ ๐ฌ๐จ๐ฅ๐ฎ๐ญ๐ข๐จ๐ง๐ฌ ๐Ÿ๐จ๐ซ ๐ญ๐จ๐๐š๐ฒ ๐š๐ง๐ ๐ญ๐จ๐ฆ๐จ๐ซ๐ซ๐จ๐ฐ.

๐Ž๐ฏ๐ž๐ซ ๐Ÿ‘๐ŸŽ ๐˜๐ž๐š๐ซ๐ฌ ๐จ๐Ÿ ๐„๐ฑ๐ฉ๐ž๐ซ๐ข๐ž๐ง๐œ๐ž ๐ข๐ง ๐ˆ๐‘๐’, ๐๐˜ & ๐๐‰ ๐“๐š๐ฑ ๐€๐ฎ๐๐ข๐ญ๐ฌ, ๐€๐ฉ๐ฉ๐ž๐š๐ฅ๐ฌ & ๐“๐š๐ฑ ๐๐ฅ๐š๐ง๐ง๐ข๐ง๐ .

๐–๐–๐–.๐“๐‰๐‚๐€๐‘๐‘๐Ž๐‹๐‹-๐‹๐€๐–.๐‚๐Ž๐Œ