My Gusto Link: https://loganallec.com/gusto/

Imagine filing Form 1120-S for years believing your S corporation election was valid—only to have the IRS come back and say your business was actually a C corporation the whole time. In this video, I walk through a real-world Form 2553 mistake that can create a massive tax mess, especially for married business owners in community property states.

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I explain what went wrong with this taxpayer’s S corporation election, why simply filing Form 1120-S does not necessarily mean the IRS accepted your S election, and the Form 2553 shareholder-consent rule business owners in community property states need to pay close attention to.

Getting this wrong can potentially mean C corporation taxation for the business and dividend treatment for money distributed to the owner—so this is one detail you do not want to overlook when making an S election.

I also discuss the reasonable-compensation requirement for S corporation owners and why I’ve used Gusto to run payroll for my own businesses for years.

If you sign up and qualify through my referral link, you may receive a promotional bonus, and I may receive a referral bonus as well.

*Topics covered:*
• IRS Form 2553
• S corporation election rejected
• Form 2553 shareholder consent
• Community property states and S corporations
• Married S corporation owners
• S corp vs. C corp taxation
• Reasonable compensation
• S corporation payroll