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Irs 8832 Form: What You Should Know
The tax form has two subparts that explain the tax classification decisions made by the business owner based on Form 8832. Generally, the subpart is based on a statement that a company makes in the Form 8832. For example: If the Statement of Facts contains an item referred to as 'The Information Item Regarding Entity Classification.' It should be included in the Form 8832. If the Statement of Facts contains an item referred to as 'The Information Item Regarding Tax Treatment of Disqualified Entities,' it should be included in the Form 8832. If the Statement of Facts contains both Items 1 and 2, it should be included in the Form 8832. There are two limitations for filing Form 8832 a second year: The first limitation, known as the 60-month limitation of filing, requires an entity to file Form 8832 at least 60 months after the last tax return has been filed. This is a significant problem for businesses to use Form 8832 as a tool. The second limitation, known as the 60-month limitation for electing corporation or partnership income tax, requires an entity to file Form 8832 for every taxable year as an S corporation or a partnership. Thus, even though the entity file Form 8832 for each year as an entity disregarded, there is a tax liability with Form 8832. There are many situations in which an individual may not need to file Form 8832 because of a tax law provision. A corporation should not use Form 8832 to change its classification if an election is required to elect an alternative taxation status. For example, if a corporation filed Form 8832 claiming an S corporation status and an election to be taxed as a partnership for federal income tax purposes, the election must be made by the corporation. The corporation is not permitted to withdraw its election and become an S corporation. A partnership's election to be taxed as an S corporation, however, can be withdrawn by the partnership, but the partnership will still have to file an annual Form 1065 to report income earned by the partnership.
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