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Form Steps to Complete 2553 IRS Vancouver Washington: What You Should Know

However, S-corporations may also elect to be treated as S-corporations under Sec. 1362 and file the Form 2553 election in order to take advantage of some following exclusions and deductions: • Subchapter D. • Capital gains. • Excluded dividends. • Excluded foreign income. • Income exclusion from S-corporation elections. • Passive loss deduction for S-corporations. • Alternative Minimum Tax (AMT). • Passive loss deduction.   A simple example of the effect of an S-corporation election on the calculation of the corporate tax for some companies is given in the following example of a non-S-corporation. A corporation, B, operates a bakery in New York State.  Taxable income after taxes is about 9,000.  Subtracting from this the federal tax is 3,800, thus making B state tax-exempt for the year, and bringing her total tax paid to roughly 8,400.  Under Sec. 1362, B elects to be taxed as an S-corporation (Form 1065, in this case) and in doing so (which may be done for a maximum of 2 years), B can elect three tax exclusions, provided she files Form 2553 at least one and up to 2 months before the last day of the corporation's fiscal year. The three tax exclusions are as follows: • Subchapter K. • Excluded dividends. • Passive loss deduction for S-corporations. The three tax exclusions cannot be combined if both a corporation and S-corporation make the elections described in Sec. 1362 (but in some cases you may be able to combine one without the other, and in others you may not be able to combine one without the other).  In this case, B chooses the passive loss deduction for S-corporations, so she and M may subtract from their tax liability (not just B's) the passive loss deduction of her S-corporation. (B could also choose to include the passive losses in taxable income, but then she would not have the passive losses, and M will take the same percentage of her passive losses as M does for B.)  Now, under Sec.

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