Wednesday, August 29, 2018
The Internal Revenue Service issued a revenue procedure last week providing information on how companies can change their method of accounting if they have switched from being an S corporation to a C corporation in response to the Tax Cuts and Jobs Act.
Revenue Procedure 2018-44 modifies two revenue procedures from earlier this year, one which clarifies for an eligible terminated S corporation that’s required to change from the overall cash method to an overall accrual method of accounting, and one which clarifies for an eligible terminated S corporation that’s allowed to continue to use the cash method.
To make the change, a business can revoke its S corporation election with the consent of a majority of its shareholders and become a C corp, though it will need unanimous consent if it wants to go back to S corp status.
See Michael Cohn, IRS Offers Guidance on Switching from S Corp to C Corp Status, Accounting Today, August 22, 2018.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.) for bringing this article to my attention.