HOW THE BUSINESS ELECTION IS LOST

Articles In This Section:

· Form of business and financing

· BUSINESS ADVANTAGES OF OPERATING AS A SOLE PROPRIETOR

· BUSINESS DISADVANTAGES OF OPERATING AS A SOLE PROPRIETOR

· BUSINESS FINANCING

· WHAT TYPES OF BUSINESS LOANS

· LOANS FOR THE BUSINESS

· A LINE OF CREDIT FOR THE BUSINESS

· How a Sole Proprietorship is Taxed

· BUSINESS ADVANTAGES OF THE PARTNERSHIP FORM

· BUSINESS DISADVANTAGES OF THE PARTNERSHIP FORM

· THREE RULES AS BUSINESS PARTNERS

· BUSINESS TAXATION

· BUSINESS CORPORATION

· BUSINESS DISADVANTAGES OF THE CORPORATE FORM

· BUSINESS CORPORATE FINANCING

· BUSINESS STOCKHOLDER ELECTION TO REPORT CORPORATE INCOME

· MAKING THE BUSINESS ELECTION

· HOW THE BUSINESS ELECTION IS LOST

· BUSINESS ADVANTAGES AND DISADVANTAGES OF STOCKHOLDER REPORTING OFCORPORATE INCOME

The election does not have to be renewed each year. But it can be revoked or automatically termi nated under any one of these conditions:

1. All stockholders agree to revoke the election by filing a statement of revocation. If made before the close of the first month of the corporation's taxable year, the revocation is effective for that year. If made after that date, the revocation is not effective until the year following the year in which the revocation was filed.

Example: You only want the advantage of the election in 1961 and you want to return in 1962 to regular corporation reporting so you must file a revocation by January 31, 1962. A later filing will not be effective until 1963.

2. A new stockholder enters the corporation and does not consent to the election.

3. The company no longer meets the stock or income tests explained above; for example, the company receives more than 20 percent of its gross receipts from dividends or rents.

When the election is revoked or terminated, you cannot make another election until the fifth year following the year in which the election was revoked or terminated. That is, you have to wait at least four years for a second chance at an election. However, you might get it sooner with Treasury permission.