J.D. formed Clampett, Incorporated, as a C corporation (calendar tax year)with J.D., Granny, and Jethro, Incorporated (a C corporation)as shareholders. On January 15, 2020, Jethro, Incorporated, sold all its shares to Jane Hathaway. On February 28, 2020, Clampett, Incorporated, filed an S corporation election, with J.D., Granny, and Jane all consenting to the election. What is the earliest effective date of the S election?
A)January 1, 2020
B)January 1, 2021
C)January 1, 2022
D)February 28, 2021
E)Never.

Question

Quizplus · Accepted Answer

For an S corporation election to be effective in the current tax year, it must be filed by the 15th day of the 3rd month of the tax year. Since Clampett, Incorporated, filed the election on February 28, 2020, it missed the deadline for the 2020 tax year. Therefore, the earliest effective date of the S election would be January 1, 2021, the beginning of the next tax year.

JD Formed Clampett, Incorporated, as a C Corporation (Calendar Tax