{"id":14028,"date":"2024-12-28T11:17:38","date_gmt":"2024-12-28T18:17:38","guid":{"rendered":"https:\/\/wcginc.com\/kb\/terminating-s-corp-election\/"},"modified":"2026-01-26T17:10:15","modified_gmt":"2026-01-26T17:10:15","slug":"terminating-s-corp-election","status":"publish","type":"epkb_post_type_1","link":"https:\/\/wcginc.com\/kb\/terminating-s-corp-election\/","title":{"rendered":"Terminating S Corp Election"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 ez-toc-wrap-right counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table Of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/wcginc.com\/kb\/terminating-s-corp-election\/#Key_Takeaways\" >Key Takeaways<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/wcginc.com\/kb\/terminating-s-corp-election\/#Taxpayers_Comprehensive_Guide_to_LLCs_and_S_Corps_2025_Edition\" >Taxpayer\u2019s Comprehensive Guide to LLCs and S Corps 2025 Edition<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/wcginc.com\/kb\/terminating-s-corp-election\/#Talk_to_a_Small_Business_CPA_About_Your_Situation\" >Talk to a Small Business CPA About Your Situation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/wcginc.com\/kb\/terminating-s-corp-election\/#Schedule_Discovery_Meeting_Now\" >Schedule Discovery Meeting Now<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/wcginc.com\/kb\/terminating-s-corp-election\/#Frequently_Asked_Questions\" >Frequently Asked Questions<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/wcginc.com\/kb\/terminating-s-corp-election\/#What_is_the_main_advantage_of_an_S_Corp_over_a_C_Corp\" >What is the main advantage of an S Corp over a C Corp?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/wcginc.com\/kb\/terminating-s-corp-election\/#Why_is_a_C_Corp_not_always_better_despite_the_21_tax_rate\" >Why is a C Corp not always better despite the 21% tax rate?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/wcginc.com\/kb\/terminating-s-corp-election\/#What_is_liquidation_of_an_S_Corp\" >What is liquidation of an S Corp?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/wcginc.com\/kb\/terminating-s-corp-election\/#What_is_the_revocation_of_an_S_Corp_election\" >What is the revocation of an S Corp election?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/wcginc.com\/kb\/terminating-s-corp-election\/#Can_an_S_Corp_revert_to_another_entity_type_after_revocation\" >Can an S Corp revert to another entity type after revocation?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/wcginc.com\/kb\/terminating-s-corp-election\/#Who_must_approve_S_Corp_revocation\" >Who must approve S Corp revocation?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/wcginc.com\/kb\/terminating-s-corp-election\/#Does_making_high_income_justify_revoking_S_Corp_status\" >Does making high income justify revoking S Corp status?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/wcginc.com\/kb\/terminating-s-corp-election\/#When_might_revocation_be_a_good_idea\" >When might revocation be a good idea?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/wcginc.com\/kb\/terminating-s-corp-election\/#Does_revocation_change_the_legal_entity_of_the_business\" >Does revocation change the legal entity of the business?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/wcginc.com\/kb\/terminating-s-corp-election\/#What_should_owners_consider_before_revoking_S_Corp_status\" >What should owners consider before revoking S Corp status?<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<div class=\"wpb-content-wrapper\"><p>[vc_row][vc_column][vc_column_text css=&#8221;&#8221; woodmart_inline=&#8221;no&#8221; text_larger=&#8221;no&#8221;]<img decoding=\"async\" class=\"size-full wp-image-31224 alignright overview-img\" src=\"https:\/\/wcginc.com\/wp-content\/uploads\/015269_1687807093_revoking_s_corp_300.jpg\" alt=\"\" width=\"300\" height=\"180\" \/>By <strong>Jason Watson, CPA<\/strong><br \/>\nPosted Sunday, December 29, 2024<\/p>\n<div class=\"overview\">\n<h2><span class=\"ez-toc-section\" id=\"Key_Takeaways\"><\/span>Key Takeaways<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ul>\n<li>The 21% C Corp tax rate looks appealing but usually costs more due to double taxation and loss of the 20% Section 199A deduction.<\/li>\n<li>S Corps generally keep overall tax rates lower, with effective rates often well below the flat C Corp rate.<\/li>\n<li>Liquidation of an S Corp is complex, involving creditor settlements, asset distribution, and closing books.<\/li>\n<li>Termination by revocation is simpler, requiring written consent from over 50% of shareholders and a statement to the IRS.<\/li>\n<li>If an S Corp election is revoked, the entity typically reverts to a C Corp, but it can be reclassified to an LLC or partnership with Form 8832.<\/li>\n<li>Common reasons to revoke include business closure, downsizing, loss of contracts, conversion to W-2 work, or foreign ownership\u2014not simply high income.<\/li>\n<\/ul>\n<\/div>\n<p>S Corps have relished being the class favorite for all kinds of reasons as stated in this book. However, the original C Corp could be making a comeback based on flawed logic from the <a href=\"https:\/\/taxfoundation.org\/the-tax-cuts-and-jobs-act-simplified-the-tax-filing-process-for-millions-of-households\/\" target=\"_blank\" rel=\"noopener\">Tax Cuts and Jobs Act of 2017<\/a>.<\/p>\n<p>The primary motivation is the seemingly attractive 21% tax rate for C corporations and while this might be lower than some taxpayer&#8217;s marginal rate, this is a sucker hole for business owners for two painfully obvious reasons. First, your marginal rate might be 22% or 24%, but your effective tax rate (or blended tax rate) is much lower. We&#8217;ll show you&#8230; not to worry.<\/p>\n<p>Second, there is a little thing called <a href=\"https:\/\/www.irs.gov\/businesses\/small-businesses-self-employed\/s-corporations\" target=\"_blank\" rel=\"noopener\">double taxation<\/a> where the C corporation pays a tax and then the shareholders pay a dividend tax on the money that is distributed. And&#8230; if you think you&#8217;re a smarty pants and say, &#8220;Yeah, but, I&#8217;ll just keep all my money in the C corporation for a rainy day and lower tax rates,&#8221; there is another little thing called accumulated earnings tax.<\/p>\n<p>Buckle up buttercup \u2018cause here we go-<\/p>\n<table style=\"width: 90%;\">\n<tbody>\n<tr>\n<td style=\"text-align: left; width: 40%;\" width=\"106\">S Corp Income<\/td>\n<td style=\"text-align: center; width: 20%;\" width=\"64\"><span style=\"color: #0000ff;\"><strong>100,000<\/strong><\/span><\/td>\n<td style=\"text-align: center; width: 20%;\" width=\"64\"><span style=\"color: #0000ff;\"><strong>200,000<\/strong><\/span><\/td>\n<td style=\"text-align: center; width: 20%;\" width=\"64\"><span style=\"color: #0000ff;\"><strong>300,000<\/strong><\/span><\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: left; width: 40%;\">Salary<\/td>\n<td style=\"text-align: center; width: 20%;\">40,000<\/td>\n<td style=\"text-align: center; width: 20%;\">80,000<\/td>\n<td style=\"text-align: center; width: 20%;\">120,000<\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: left; width: 40%;\">Payroll Tax<\/td>\n<td style=\"text-align: center; width: 20%;\">6,120<\/td>\n<td style=\"text-align: center; width: 20%;\">12,240<\/td>\n<td style=\"text-align: center; width: 20%;\">18,360<\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: left; width: 40%;\">Income Tax<\/td>\n<td style=\"text-align: center; width: 20%;\">6,980<\/td>\n<td style=\"text-align: center; width: 20%;\">24,150<\/td>\n<td style=\"text-align: center; width: 20%;\">44,266<\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: left; width: 40%;\">Total Tax S Corp<\/td>\n<td style=\"text-align: center; width: 20%;\">13,100<\/td>\n<td style=\"text-align: center; width: 20%;\">36,390<\/td>\n<td style=\"text-align: center; width: 20%;\">62,626<\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: left; width: 40%;\"><\/td>\n<td style=\"text-align: center; width: 20%;\"><\/td>\n<td style=\"text-align: center; width: 20%;\"><\/td>\n<td style=\"text-align: center; width: 20%;\"><\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: left; width: 40%;\">C Corp Income<\/td>\n<td style=\"text-align: center; width: 20%;\"><span style=\"color: #0000ff;\"><strong>100,000<\/strong><\/span><\/td>\n<td style=\"text-align: center; width: 20%;\"><span style=\"color: #0000ff;\"><strong>200,000<\/strong><\/span><\/td>\n<td style=\"text-align: center; width: 20%;\"><span style=\"color: #0000ff;\"><strong>300,000<\/strong><\/span><\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: left; width: 40%;\">C Corp Tax<\/td>\n<td style=\"text-align: center; width: 20%;\">21,000<\/td>\n<td style=\"text-align: center; width: 20%;\">42,000<\/td>\n<td style=\"text-align: center; width: 20%;\">63,000<\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: left; width: 40%;\">Dividends<\/td>\n<td style=\"text-align: center; width: 20%;\">79,000<\/td>\n<td style=\"text-align: center; width: 20%;\">158,000<\/td>\n<td style=\"text-align: center; width: 20%;\">237,000<\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: left; width: 40%;\">Dividend Tax<\/td>\n<td style=\"text-align: center; width: 20%;\">0<\/td>\n<td style=\"text-align: center; width: 20%;\">23,700<\/td>\n<td style=\"text-align: center; width: 20%;\">44,556<\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: left; width: 40%;\">Total C Corp Tax<\/td>\n<td style=\"text-align: center; width: 20%;\">21,000<\/td>\n<td style=\"text-align: center; width: 20%;\">65,700<\/td>\n<td style=\"text-align: center; width: 20%;\">107,556<\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: left; width: 40%;\"><\/td>\n<td style=\"text-align: center; width: 20%;\"><\/td>\n<td style=\"text-align: center; width: 20%;\"><\/td>\n<td style=\"text-align: center; width: 20%;\"><\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: left; width: 40%;\">Effective S Tax Rate<\/td>\n<td style=\"text-align: center; width: 20%;\">13.1%<\/td>\n<td style=\"text-align: center; width: 20%;\">18.2%<\/td>\n<td style=\"text-align: center; width: 20%;\">20.9%<\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: left; width: 40%;\">Effective C Tax Rate<\/td>\n<td style=\"text-align: center; width: 20%;\">21.0%<\/td>\n<td style=\"text-align: center; width: 20%;\">32.9%<\/td>\n<td style=\"text-align: center; width: 20%;\">35.9%<\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: left; width: 40%;\">Delta <span style=\"color: #0000ff;\"><strong>(extra tax because of C Corp)<\/strong><\/span><\/td>\n<td style=\"text-align: center; width: 20%;\"><span style=\"color: #0000ff;\"><strong>7.9%<\/strong><\/span><\/td>\n<td style=\"text-align: center; width: 20%;\"><span style=\"color: #0000ff;\"><strong>14.7%<\/strong><\/span><\/td>\n<td style=\"text-align: center; width: 20%;\"><span style=\"color: #0000ff;\"><strong>15.0%<\/strong><\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>As you can see, a C Corp does not make sense after you add in capital gains tax on the dividends. Also note the effective tax rate (or labeled as tax &#8220;pain&#8221;) for the S corporation owner. At $100,000 in net business income, the total tax pain including payroll taxes is 13.1%, and at $200,000 it is only 18.2%. This is still well below the C corporation tax rate of 21%.<\/p>\n<p>One more thing that is not computed above; C corporations do not get the Section 199A deduction which is 20%. 20% times the marginal tax bracket of 15% is another 3% savings; 20% times the marginal tax bracket of 37% is another 7% savings. So, please pump the brakes on the \u201cI wanna dump my S Corp for the magical tax arbitrage offered by a C Corp\u201d nonsense. Wow, that was harsh. We did tell you to buckle up but then we offended you by calling you buttercup. Safety with an insult.<\/p>\n<p style=\"padding-left: 40px;\"><span style=\"color: #0000ff;\"><strong>Sidebar:<\/strong><\/span> In a previous chapter we highlighted several reasons why a C corporation makes sense. Paring down debt, employee stock plans, funding with a 401k, keep income off your individual tax return, among many ideas.<\/p>\n<p>Let\u2019s say there are other reason to revoke S Corp election. Yes, you can change back and the present-day solution is accomplished by either liquidating, or terminating the S Corp election.<\/p>\n<p>Liquidation is the more complicated of the two. In a nutshell, the process begins with a unanimous vote to close the business. Once that decision is made, it&#8217;s a complicated process of contacting creditors, assessing receivables, distributing or selling property and closing up the books.<\/p>\n<p>Termination, moderately more elegant. <a href=\"https:\/\/www.thetaxadviser.com\/issues\/2018\/aug\/c-corp-s-corp-tax-reform.html\" target=\"_blank\" rel=\"noopener\">Terminating the S Corp election<\/a> can happen one of two ways. Preferably by revocation, or the next best alternative, violating one of the S Corp rules. Violating one of the S corporation rules is not an elegant option, however.<\/p>\n<p>Therefore, revocation is the preferred direct route and is as simple as writing a statement to the IRS revoking your S Corp election. In this manner, obtaining written consent from more than 50% of your shareholders is required. Simple for one or two owner S Corps, but community property states, tenants in common, and majority shareholders could complicate that. Again, if the underlying entity is an LLC then the members will be bound by the Operating Agreement in terms of voting and other requirements.<\/p>\n<p>When your S corporation election is revoked, either intentionally or not, your business will more than likely revert to a C Corp for taxation. We can then file a <a href=\"https:\/\/www.irs.gov\/forms-pubs\/form-8832-entity-classification-election\" target=\"_blank\" rel=\"noopener\">Form 8832<\/a> which will reclassify your business back to an LLC or partnership, again for taxation. Remember, the underlying entity does not change with the Secretary of State. There might be some accounting headache and subsequent tax consequences with capital accounts or other assets, but we can advise you on those concerns once all the details are vetted out.<\/p>\n<p>Why would you want to revoke your S Corp election? There are many reasons- business closed or is shrinking to a point where it doesn\u2019t make sense, lost the contract gig, got converted from 1099 to W-2, foreign investors, etc. are among the most frequent. We can help guide you as these situations arise.<\/p>\n<p>Notice how making too much income wasn\u2019t on the list of possible reasons. Of course, there are exceptions, but generally speaking if you make $30,000 or $300,000 or even $3,000,000, the S Corp election is going to be your friend.[\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column][vc_empty_space height=&#8221;25px&#8221;][vc_column_text]<style data-type=\"vc_shortcodes-custom-css\">#wd-6915e3dd2a9b5 .info-box-title{line-height:40px;font-size:30px;color:#473d3c;}#wd-6915e3dd2a9b5 .info-box-inner{line-height:26px;font-size:16px;color:#473d3c;}#wd-6915e437409dd .info-box-title{line-height:40px;font-size:30px;color:#473d3c;}#wd-6915e437409dd .info-box-inner{line-height:26px;font-size:16px;color:#473d3c;}#wd-68460c16bff16 .info-box-title{line-height:60px;font-size:50px;color:#473d3c;}#wd-68460c16bff16 .info-box-inner{line-height:26px;font-size:16px;color:#473d3c;}#wd-687b937e0887f .info-box-title{line-height:26px;font-size:16px;color:#473d3c;}#wd-687b937e0887f .info-box-inner{line-height:22px;font-size:12px;color:#473d3c;}#wd-687b9384e0d51 .info-box-title{line-height:26px;font-size:16px;color:#473d3c;}#wd-687b9384e0d51 .info-box-inner{line-height:22px;font-size:12px;color:#473d3c;}#wd-687b938a8f4b3 .info-box-title{line-height:26px;font-size:16px;color:#473d3c;}#wd-687b938a8f4b3 .info-box-inner{line-height:22px;font-size:12px;color:#473d3c;}#wd-68bcf7fc8516a .info-box-title{line-height:40px;font-size:30px;color:#473d3c;}#wd-68bcf7fc8516a .info-box-inner{line-height:26px;font-size:16px;color:#473d3c;}#wd-68bcfccd83cf7 .info-box-title{line-height:46px;font-size:36px;color:#473d3c;}#wd-68bcfccd83cf7 .info-box-inner{line-height:26px;font-size:16px;color:#473d3c;}@media (max-width: 1199px) {#wd-6915e3dd2a9b5 .info-box-title{line-height:34px;font-size:24px;}#wd-6915e3dd2a9b5 .info-box-inner{line-height:24px;font-size:14px;}#wd-6915e437409dd .info-box-title{line-height:34px;font-size:24px;}#wd-6915e437409dd .info-box-inner{line-height:24px;font-size:14px;}#wd-68460c16bff16 .info-box-title{line-height:50px;font-size:40px;}#wd-687b937e0887f .info-box-title{line-height:25px;font-size:15px;}#wd-687b9384e0d51 .info-box-title{line-height:25px;font-size:15px;}#wd-687b938a8f4b3 .info-box-title{line-height:25px;font-size:15px;}#wd-68bcf7fc8516a .info-box-title{line-height:34px;font-size:24px;}#wd-68bcf7fc8516a .info-box-inner{line-height:24px;font-size:14px;}#wd-68bcfccd83cf7 .info-box-title{line-height:36px;font-size:26px;}#wd-68bcfccd83cf7 .info-box-inner{line-height:24px;font-size:14px;}}@media (max-width: 767px) {#wd-6915e3dd2a9b5 .info-box-title{line-height:28px;font-size:18px;}#wd-6915e3dd2a9b5 .info-box-inner{line-height:24px;font-size:14px;}#wd-6915e437409dd .info-box-title{line-height:28px;font-size:18px;}#wd-6915e437409dd .info-box-inner{line-height:24px;font-size:14px;}#wd-68460c16bff16 .info-box-title{line-height:40px;font-size:30px;}#wd-687b937e0887f .info-box-title{line-height:24px;font-size:14px;}#wd-687b9384e0d51 .info-box-title{line-height:24px;font-size:14px;}#wd-687b938a8f4b3 .info-box-title{line-height:24px;font-size:14px;}#wd-68bcf7fc8516a .info-box-title{line-height:28px;font-size:18px;}#wd-68bcf7fc8516a .info-box-inner{line-height:24px;font-size:14px;}#wd-68bcfccd83cf7 .info-box-title{line-height:28px;font-size:18px;}#wd-68bcfccd83cf7 .info-box-inner{line-height:24px;font-size:14px;}}<\/style><div class=\"wpb-content-wrapper\">[vc_row][vc_column]\t\t\t<div class=\"info-box-wrapper\">\n\t\t\t\t<div id=\"wd-6915e3dd2a9b5\" class=\" wd-rs-6915e3dd2a9b5 wd-info-box wd-wpb text-center box-icon-align-top box-style- color-scheme- wd-bg-none border-btm-title kb \">\n\t\t\t\t\t\t\t\t\t\t<div class=\"info-box-content\">\n\t\t\t\t\t\t\t\t\t\t\t\t<div class=\"info-box-inner reset-last-child\"><p style=\"text-align: center;\"><em>Jason Watson, CPA, is a Partner and the CEO of <strong>WCG CPAs &amp; Advisors<\/strong>, a boutique yet progressive tax, accounting and business consultation firm located in Colorado serving small business owners and taxpayers worldwide.<\/em><\/p>\n<div style=\"display: flex; justify-content: center;\"><a href=\"https:\/\/www.linkedin.com\/in\/jason-watson-cpa\/\"><img decoding=\"async\" class=\"alignnone wp-image-17327 entered lazyloaded\" style=\"height: 35px!important; width: auto!important;\" src=\"https:\/\/wcginc.com\/wp-content\/uploads\/linkedin-150x150-1.png.webp\" alt=\"Jason Watson CPA LinkedIn\" \/><\/a>\u00a0\u00a0\u00a0\u00a0\u00a0<a href=\"mailto:jason@wcginc.com\"><img decoding=\"async\" class=\"alignnone size-thumbnail wp-image-17334 entered lazyloaded\" style=\"height: 35px!important; width: auto!important;\" src=\"https:\/\/wcginc.com\/wp-content\/uploads\/mail-150x150-1.png.webp\" alt=\"Jason Watson CPA Email\" \/><\/a><\/div>\n<\/div>\n\n\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\n\t\t\t\t\t<style><\/style>\t\t\t\t<\/div>\n\t\t\t<\/div>\n\t\t\t\t\t<div class=\"info-box-wrapper\">\n\t\t\t\t<div id=\"wd-6915e437409dd\" class=\" wd-rs-6915e437409dd wd-info-box wd-wpb text-left box-icon-align-top box-style- color-scheme- wd-bg-none border-btm-title img-right kb \">\n\t\t\t\t\t\t\t\t\t\t<div class=\"info-box-content\">\n\t\t\t\t\t\t<h2 class=\"info-box-title title wd-font-weight-800 box-title-style-default font-primary wd-fontsize-m\"><span class=\"ez-toc-section\" id=\"Taxpayers_Comprehensive_Guide_to_LLCs_and_S_Corps_2025_Edition\"><\/span>Taxpayer\u2019s Comprehensive Guide to LLCs and S Corps 2025 Edition<span class=\"ez-toc-section-end\"><\/span><\/h2>\t\t\t\t\t\t<div class=\"info-box-inner reset-last-child\"><p><img decoding=\"async\" class=\"size-full wp-image-31529 alignnone\" src=\"https:\/\/wcginc.com\/wp-content\/uploads\/LLC-S-Corp-Web-and-Social-GFX_275-250x300-1.webp\" alt=\"Taxpayer\u2019s Comprehensive Guide to LLCs and S Corps 2025 Edition\" width=\"250\" height=\"300\" \/>This KB article is an excerpt from our 420+ page book (some picture pages, but no scatch and sniff) which is available in paperback from\u00a0<a href=\"https:\/\/www.wcginc.com\/amazon\" target=\"_blank\" rel=\"noopener\">Amazon<\/a>, as an eBook for\u00a0<a href=\"https:\/\/www.wcginc.com\/kindle\" target=\"_blank\" rel=\"noopener\">Kindle<\/a>\u00a0and as a\u00a0<a href=\"https:\/\/www.wcginc.com\/pdf\" target=\"_blank\" rel=\"noopener\">PDF<\/a>\u00a0from ClickBank. We used to publish with iTunes and Nook, but keeping up with two different formats was brutal. You can cruise through these KB articles online, click on the fancy buttons below or\u00a0<a href=\"https:\/\/wcginc.com\/business-services\/book\/\" target=\"_blank\" rel=\"noopener\">visit our webpage<\/a>\u00a0which provides more information.<\/p>\n<table class=\"purchase-table\">\n<tbody>\n<tr>\n<td style=\"text-align: center;\"><a href=\"\/amazon\" target=\"_blank\" rel=\"noopener\"><img decoding=\"async\" class=\"alignnone size-full wp-image-6657 aligncenter\" style=\"float: none;\" src=\"https:\/\/wcginc.com\/wp-content\/uploads\/amazon-imageresized.png.webp\" alt=\"LLCs and S Corp Book Amazon\" width=\"50\" height=\"50\" \/><\/a><\/td>\n<td style=\"text-align: center;\"><a href=\"\/kindle\" target=\"_blank\" rel=\"noopener\"><img decoding=\"async\" class=\"alignnone size-full wp-image-6658\" style=\"float: none;\" src=\"https:\/\/wcginc.com\/wp-content\/uploads\/kindle-imageresized.png.webp\" alt=\"LLCs and S Corp Book Kindle\" width=\"50\" height=\"50\" \/><\/a><\/td>\n<td style=\"text-align: center;\"><a href=\"\/pdf\" target=\"_blank\" rel=\"noopener\"><img decoding=\"async\" class=\"alignnone size-full wp-image-6659 aligncenter\" style=\"float: none;\" src=\"https:\/\/wcginc.com\/wp-content\/uploads\/PDFresized.png.webp\" alt=\"LLCs and S Corp Book PDF\" width=\"50\" height=\"50\" \/><\/a><\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: center;\"><strong>$49.95<\/strong><\/td>\n<td style=\"text-align: center;\"><strong>$39.95<\/strong><\/td>\n<td style=\"text-align: center;\"><strong>$29.95<\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n\n\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\n\t\t\t\t\t<style><\/style>\t\t\t\t<\/div>\n\t\t\t<\/div>\n\t\t[\/vc_column][\/vc_row][vc_row equal_height=\"yes\" content_placement=\"top\" el_id=\"consultation-secc\" woodmart_css_id=\"6756f7d427735\" responsive_spacing=\"eyJwYXJhbV90eXBlIjoid29vZG1hcnRfcmVzcG9uc2l2ZV9zcGFjaW5nIiwic2VsZWN0b3JfaWQiOiI2NzU2ZjdkNDI3NzM1Iiwic2hvcnRjb2RlIjoidmNfcm93IiwiZGF0YSI6eyJ0YWJsZXQiOnt9LCJtb2JpbGUiOnt9fX0=\" mobile_bg_img_hidden=\"no\" tablet_bg_img_hidden=\"no\" woodmart_parallax=\"0\" woodmart_gradient_switch=\"no\" woodmart_box_shadow=\"no\" wd_z_index=\"no\" woodmart_disable_overflow=\"0\" row_reverse_mobile=\"0\" row_reverse_tablet=\"0\" el_class=\"kb-consult\"][vc_column]\t\t\t<div class=\"info-box-wrapper\">\n\t\t\t\t<div id=\"wd-68460c2ba6365\" class=\" wd-rs-68460c2ba6365 wd-info-box wd-wpb text-left box-icon-align-top box-style- color-scheme- wd-bg-none border-btm-title kb-fix \">\n\t\t\t\t\t\t\t\t\t\t<div class=\"info-box-content\">\n\t\t\t\t\t\t<h2 class=\"info-box-title title box-title-style-default wd-fontsize-m\"><span class=\"ez-toc-section\" id=\"Talk_to_a_Small_Business_CPA_About_Your_Situation\"><\/span>Talk to a Small Business CPA About Your Situation<span class=\"ez-toc-section-end\"><\/span><\/h2>\t\t\t\t\t\t<div class=\"info-box-inner reset-last-child\"><p>Please use the form below to tell us a little about yourself, and what you have going on with your small business or 1099 contractor gig. <strong>WCG CPAs &amp; Advisors<\/strong> are small business CPAs, tax professionals and consultants, and we look forward to talking to you!<\/p>\n<\/div>\n\n\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t<\/div>\n\t\t[vc_row_inner el_id=\"consultation-inner\" woodmart_css_id=\"66fd6caf92fc0\" responsive_spacing=\"eyJwYXJhbV90eXBlIjoid29vZG1hcnRfcmVzcG9uc2l2ZV9zcGFjaW5nIiwic2VsZWN0b3JfaWQiOiI2NmZkNmNhZjkyZmMwIiwic2hvcnRjb2RlIjoidmNfcm93X2lubmVyIiwiZGF0YSI6eyJ0YWJsZXQiOnt9LCJtb2JpbGUiOnt9fX0=\" mobile_bg_img_hidden=\"no\" tablet_bg_img_hidden=\"no\" woodmart_parallax=\"0\" woodmart_gradient_switch=\"no\" woodmart_box_shadow=\"no\" wd_z_index=\"no\" woodmart_disable_overflow=\"0\" row_reverse_mobile=\"0\" row_reverse_tablet=\"0\"][vc_column_inner][vc_raw_js el_class=\"defaultBot\"]JTNDc2NyaXB0JTIwdHlwZSUzRCUyMnRleHQlMkZqYXZhc2NyaXB0JTIyJTIwc3JjJTNEJTIyaHR0cHMlM0ElMkYlMkZ3Y2dpbmMuam90Zm9ybS5jb20lMkZqc2Zvcm0lMkYyNTE2NjQ4Nzk0MTQ5NzMlMjIlM0UlM0MlMkZzY3JpcHQlM0U=[\/vc_raw_js][\/vc_column_inner][\/vc_row_inner]\t\t\t<div class=\"info-box-wrapper\">\n\t\t\t\t<div id=\"wd-68460c16bff16\" class=\" wd-rs-68460c16bff16 wd-info-box wd-wpb text-left box-icon-align-top box-style- color-scheme- wd-bg-none border-btm-title defaultBot \">\n\t\t\t\t\t\t\t\t\t\t<div class=\"info-box-content\">\n\t\t\t\t\t\t\t\t\t\t\t\t<div class=\"info-box-inner reset-last-child\"><p>The tax advisors, business consultants and rental property experts at <strong>WCG CPAs &amp; Advisors<\/strong> are not salespeople; we are not putting lipstick on a pig expecting you to love it. Our job remains being professionally detached, giving you information and letting you decide within our ethical guidelines and your risk profiles.<\/p>\n<p>We see far too many crazy schemes and half-baked ideas from attorneys and wealth managers. In some cases, they are good ideas. In most cases, all the entities, layering and mixed ownership is only the illusion of precision. As Chris Rock says, just because you can drive your car with your feet doesn\u2019t make it a good idea. In other words, let\u2019s not automatically convert \u201cyou can\u201d into \u201cyou must.\u201d<\/p>\n<p><strong>Let\u2019s chat so you can be smart about it.<\/strong><\/p>\n<p>We typically schedule a 20-minute complimentary quick chat with one of our Partners or our amazing Senior Tax Professionals to determine if we are a good fit for each other, and how an engagement with our team looks. Tax returns only? Business advisory? Tax strategy and planning? Rental property support?<\/p>\n<\/div>\n\n\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\n\t\t\t\t\t<style><\/style>\t\t\t\t<\/div>\n\t\t\t<\/div>\n\t\t[vc_row_inner equal_height=\"yes\" el_class=\"boxes--pack\" woodmart_css_id=\"673b5f334f247\" responsive_spacing=\"eyJwYXJhbV90eXBlIjoid29vZG1hcnRfcmVzcG9uc2l2ZV9zcGFjaW5nIiwic2VsZWN0b3JfaWQiOiI2NzNiNWYzMzRmMjQ3Iiwic2hvcnRjb2RlIjoidmNfcm93X2lubmVyIiwiZGF0YSI6eyJ0YWJsZXQiOnt9LCJtb2JpbGUiOnt9fX0=\" mobile_bg_img_hidden=\"no\" tablet_bg_img_hidden=\"no\" woodmart_parallax=\"0\" woodmart_gradient_switch=\"no\" woodmart_box_shadow=\"no\" wd_z_index=\"no\" woodmart_disable_overflow=\"0\" row_reverse_mobile=\"0\" row_reverse_tablet=\"0\"][vc_column_inner width=\"1\/3\"]\t\t\t<div class=\"info-box-wrapper\">\n\t\t\t\t<div id=\"wd-687b937e0887f\" class=\" wd-rs-687b937e0887f wd-info-box wd-wpb text-left box-icon-align-top box-style- color-scheme- wd-bg-none business-boxes \">\n\t\t\t\t\t\t\t\t\t\t\t<div class=\"box-icon-wrapper  box-with-icon box-icon-simple\">\n\t\t\t\t\t\t\t<div class=\"info-box-icon\">\n\n\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<img decoding=\"async\" width=\"622\" height=\"622\" src=\"https:\/\/wcginc.com\/wp-content\/uploads\/Text-WCG-Offices-1.jpg\" class=\"attachment-full size-full\" alt=\"Text WCG Offices\" \/>\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t\t\t<div class=\"info-box-content\">\n\t\t\t\t\t\t<h4 class=\"info-box-title title wd-font-weight-600 box-title-style-default font-primary wd-fontsize-m\">Text WCG Offices<\/h4>\t\t\t\t\t\t<div class=\"info-box-inner reset-last-child\"><p>Need to get in touch through a quick text?\u00a0 We\u2019ll respond back within a day and get going!<\/p>\n<\/div>\n\n\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t\t\t<a class=\"wd-info-box-link wd-fill\" aria-label=\"Infobox link\" href=\"sms:+17193452100?&amp;body=Hey%20WCG!%20Please%20call%20me%20to%20discuss%20your%20CPA%20services\" title=\"\"><\/a>\n\t\t\t\t\t\n\t\t\t\t\t<style><\/style>\t\t\t\t<\/div>\n\t\t\t<\/div>\n\t\t[\/vc_column_inner][vc_column_inner width=\"1\/3\"]\t\t\t<div class=\"info-box-wrapper\">\n\t\t\t\t<div id=\"wd-687b9384e0d51\" class=\" wd-rs-687b9384e0d51 wd-info-box wd-wpb text-left box-icon-align-top box-style- color-scheme- wd-bg-none business-boxes \">\n\t\t\t\t\t\t\t\t\t\t\t<div class=\"box-icon-wrapper  box-with-icon box-icon-simple\">\n\t\t\t\t\t\t\t<div class=\"info-box-icon\">\n\n\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<img decoding=\"async\" width=\"622\" height=\"622\" src=\"https:\/\/wcginc.com\/wp-content\/uploads\/Chat-Our-Amazing-Team-1.jpg\" class=\"attachment-full size-full\" alt=\"Chat our amazing team\" \/>\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t\t\t<div class=\"info-box-content\">\n\t\t\t\t\t\t<h4 class=\"info-box-title title wd-font-weight-600 box-title-style-default font-primary wd-fontsize-m\">Call Our Amazing Team<\/h4>\t\t\t\t\t\t<div class=\"info-box-inner reset-last-child\"><p class=\" \">If you need to speak to a tax professional now, give us a call and we'll get you connected.<\/p>\n<\/div>\n\n\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t\t\t<a class=\"wd-info-box-link wd-fill\" aria-label=\"Infobox link\" href=\"tel:719-387-9800\" title=\"\"><\/a>\n\t\t\t\t\t\n\t\t\t\t\t<style><\/style>\t\t\t\t<\/div>\n\t\t\t<\/div>\n\t\t[\/vc_column_inner][vc_column_inner width=\"1\/3\"]\t\t\t<div class=\"info-box-wrapper\">\n\t\t\t\t<div id=\"wd-687b938a8f4b3\" class=\" wd-rs-687b938a8f4b3 wd-info-box wd-wpb text-left box-icon-align-top box-style- color-scheme- wd-bg-none business-boxes nav-button-chat \">\n\t\t\t\t\t\t\t\t\t\t\t<div class=\"box-icon-wrapper  box-with-icon box-icon-simple\">\n\t\t\t\t\t\t\t<div class=\"info-box-icon\">\n\n\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<img decoding=\"async\" width=\"622\" height=\"622\" src=\"https:\/\/wcginc.com\/wp-content\/uploads\/Chat-With-a-Tax-Pro-2.jpg\" class=\"attachment-full size-full\" alt=\"Chat with a tax pro\" \/>\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t\t\t<div class=\"info-box-content\">\n\t\t\t\t\t\t<h4 class=\"info-box-title title wd-font-weight-600 box-title-style-default font-primary wd-fontsize-m\">Chat With a Tax Pro<\/h4>\t\t\t\t\t\t<div class=\"info-box-inner reset-last-child\"><p>Taxes can be tricky. Chat with a WCG human now and get questions answered.<\/p>\n<\/div>\n\n\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\n\t\t\t\t\t<style><\/style>\t\t\t\t<\/div>\n\t\t\t<\/div>\n\t\t[\/vc_column_inner][\/vc_row_inner][\/vc_column][\/vc_row][vc_row equal_height=\"yes\" content_placement=\"top\" woodmart_css_id=\"684abef7ecaa9\" responsive_spacing=\"eyJwYXJhbV90eXBlIjoid29vZG1hcnRfcmVzcG9uc2l2ZV9zcGFjaW5nIiwic2VsZWN0b3JfaWQiOiI2ODRhYmVmN2VjYWE5Iiwic2hvcnRjb2RlIjoidmNfcm93IiwiZGF0YSI6eyJ0YWJsZXQiOnt9LCJtb2JpbGUiOnt9fX0=\" mobile_bg_img_hidden=\"no\" tablet_bg_img_hidden=\"no\" woodmart_parallax=\"0\" woodmart_gradient_switch=\"no\" woodmart_box_shadow=\"no\" wd_z_index=\"no\" woodmart_disable_overflow=\"0\" row_reverse_mobile=\"0\" row_reverse_tablet=\"0\" el_class=\"kb-consult\"][vc_column]\t\t\t<div class=\"info-box-wrapper\">\n\t\t\t\t<div id=\"wd-68bcf7fc8516a\" class=\" wd-rs-68bcf7fc8516a wd-info-box wd-wpb text-left box-icon-align-top box-style- color-scheme- wd-bg-none border-btm-title \">\n\t\t\t\t\t\t\t\t\t\t<div class=\"info-box-content\">\n\t\t\t\t\t\t<h2 class=\"info-box-title title wd-font-weight-600 box-title-style-default font-primary wd-fontsize-m\"><span class=\"ez-toc-section\" id=\"Schedule_Discovery_Meeting_Now\"><\/span>Schedule Discovery Meeting Now<span class=\"ez-toc-section-end\"><\/span><\/h2>\t\t\t\t\t\t<div class=\"info-box-inner reset-last-child\"><\/div>\n\n\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\n\t\t\t\t\t<style><\/style>\t\t\t\t<\/div>\n\t\t\t<\/div>\n\t\t[vc_row_inner content_placement=\"middle\" el_class=\"client-review-secs box--card\" woodmart_css_id=\"672e712482714\" responsive_spacing=\"eyJwYXJhbV90eXBlIjoid29vZG1hcnRfcmVzcG9uc2l2ZV9zcGFjaW5nIiwic2VsZWN0b3JfaWQiOiI2NzJlNzEyNDgyNzE0Iiwic2hvcnRjb2RlIjoidmNfcm93X2lubmVyIiwiZGF0YSI6eyJ0YWJsZXQiOnt9LCJtb2JpbGUiOnt9fX0=\" mobile_bg_img_hidden=\"no\" tablet_bg_img_hidden=\"no\" woodmart_parallax=\"0\" woodmart_gradient_switch=\"no\" woodmart_box_shadow=\"no\" wd_z_index=\"no\" woodmart_disable_overflow=\"0\" row_reverse_mobile=\"0\" row_reverse_tablet=\"0\"][vc_column_inner width=\"1\/3\" woodmart_css_id=\"671780b35b49a\" parallax_scroll=\"no\" woodmart_sticky_column=\"false\" wd_collapsible_content_switcher=\"no\" wd_column_role_offcanvas_desktop=\"no\" wd_column_role_offcanvas_tablet=\"no\" wd_column_role_offcanvas_mobile=\"no\" wd_column_role_content_desktop=\"no\" wd_column_role_content_tablet=\"no\" wd_column_role_content_mobile=\"no\" mobile_bg_img_hidden=\"no\" tablet_bg_img_hidden=\"no\" woodmart_parallax=\"0\" woodmart_box_shadow=\"no\" responsive_spacing=\"eyJwYXJhbV90eXBlIjoid29vZG1hcnRfcmVzcG9uc2l2ZV9zcGFjaW5nIiwic2VsZWN0b3JfaWQiOiI2NzE3ODBiMzViNDlhIiwic2hvcnRjb2RlIjoidmNfY29sdW1uX2lubmVyIiwiZGF0YSI6eyJ0YWJsZXQiOnt9LCJtb2JpbGUiOnt9fX0=\" wd_z_index=\"no\"]\t\t<div id=\"wd-68874e76cd7bc\" class=\"wd-image wd-wpb wd-rs-68874e76cd7bc text-left \">\n\t\t\t\n\t\t\t<img decoding=\"async\" width=\"300\" height=\"200\" src=\"https:\/\/wcginc.com\/wp-content\/uploads\/265518_2057667071_tax_consultation_300-1.webp\" class=\"attachment-full size-full\" alt=\"Request a Meeting with WCG Inc\" \/>\n\t\t\t\t\t<\/div>\n\t\t[\/vc_column_inner][vc_column_inner width=\"2\/3\" woodmart_css_id=\"671780c0415fb\" parallax_scroll=\"no\" woodmart_sticky_column=\"false\" wd_collapsible_content_switcher=\"no\" wd_column_role_offcanvas_desktop=\"no\" wd_column_role_offcanvas_tablet=\"no\" wd_column_role_offcanvas_mobile=\"no\" wd_column_role_content_desktop=\"no\" wd_column_role_content_tablet=\"no\" wd_column_role_content_mobile=\"no\" mobile_bg_img_hidden=\"no\" tablet_bg_img_hidden=\"no\" woodmart_parallax=\"0\" woodmart_box_shadow=\"no\" responsive_spacing=\"eyJwYXJhbV90eXBlIjoid29vZG1hcnRfcmVzcG9uc2l2ZV9zcGFjaW5nIiwic2VsZWN0b3JfaWQiOiI2NzE3ODBjMDQxNWZiIiwic2hvcnRjb2RlIjoidmNfY29sdW1uX2lubmVyIiwiZGF0YSI6eyJ0YWJsZXQiOnt9LCJtb2JpbGUiOnt9fX0=\" wd_z_index=\"no\"]\t\t\t<div class=\"info-box-wrapper\">\n\t\t\t\t<div id=\"wd-68bcfccd83cf7\" class=\" wd-rs-68bcfccd83cf7 wd-info-box wd-wpb text-left box-icon-align-top box-style- color-scheme- wd-bg-none with-btn box-btn-static \">\n\t\t\t\t\t\t\t\t\t\t<div class=\"info-box-content\">\n\t\t\t\t\t\t\t\t\t\t\t\t<div class=\"info-box-inner reset-last-child\"><p>Ready to schedule now and talk about S Corp and reasonable salary and all that gibberish? Let's do it! Here is a link to a Discovery Meeting with one of our Partners or Senior Tax Professionals to understand your tax footprint and objectives, and how <strong>WCG CPAs &amp; Advisors<\/strong> might help.<\/p>\n<\/div>\n\n\t\t\t\t\t\t<div class=\"info-btn-wrapper\"><div id=\"wd-6a31bcfa08273\" class=\"  wd-button-wrapper text-left\"><a href=\"https:\/\/calendly.com\/wcg-cpas-advisors\/discovery-meeting-instant\" title=\"\" target=\"_blank\" class=\"btn btn-style-default btn-shape-rectangle btn-size-default\">Schedule Meeting<\/a><\/div><\/div>\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\n\t\t\t\t\t<style><\/style>\t\t\t\t<\/div>\n\t\t\t<\/div>\n\t\t[\/vc_column_inner][\/vc_row_inner][\/vc_column][\/vc_row]<\/div>[\/vc_column_text]\t\t\t<div class=\"info-box-wrapper\">\n\t\t\t\t<div id=\"wd-68b5c0118cd82\" class=\" wd-rs-68b5c0118cd82 wd-info-box wd-wpb text-left box-icon-align-top box-style- color-scheme- wd-bg-none border-btm-title faqs-wrap \">\n\t\t\t\t\t\t\t\t\t\t<div class=\"info-box-content\">\n\t\t\t\t\t\t<h2 class=\"info-box-title title box-title-style-default wd-fontsize-m\"><span class=\"ez-toc-section\" id=\"Frequently_Asked_Questions\"><\/span>Frequently Asked Questions<span class=\"ez-toc-section-end\"><\/span><\/h2>\t\t\t\t\t\t<div class=\"info-box-inner reset-last-child\"><\/p>\n<h3><span class=\"ez-toc-section\" id=\"What_is_the_main_advantage_of_an_S_Corp_over_a_C_Corp\"><\/span>What is the main advantage of an S Corp over a C Corp?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Lower effective tax rates and eligibility for the 20% Section 199A deduction.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Why_is_a_C_Corp_not_always_better_despite_the_21_tax_rate\"><\/span>Why is a C Corp not always better despite the 21% tax rate?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Double taxation on dividends and loss of deductions make the overall tax burden higher.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"What_is_liquidation_of_an_S_Corp\"><\/span>What is liquidation of an S Corp?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Closing the business completely, settling debts, distributing assets, and closing the books.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"What_is_the_revocation_of_an_S_Corp_election\"><\/span>What is the revocation of an S Corp election?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>A simpler method to end S Corp status by filing a statement with the IRS and obtaining shareholder consent.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Can_an_S_Corp_revert_to_another_entity_type_after_revocation\"><\/span>Can an S Corp revert to another entity type after revocation?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Yes, it can be reclassified as an LLC or partnership using Form 8832 for tax purposes.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Who_must_approve_S_Corp_revocation\"><\/span>Who must approve S Corp revocation?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Over 50% of the shareholders must provide written consent.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Does_making_high_income_justify_revoking_S_Corp_status\"><\/span>Does making high income justify revoking S Corp status?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Generally no; high income alone is not a sufficient reason to switch to a C Corp.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"When_might_revocation_be_a_good_idea\"><\/span>When might revocation be a good idea?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Business closure, downsizing, lost contracts, change from 1099 to W-2 work, or foreign ownership.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Does_revocation_change_the_legal_entity_of_the_business\"><\/span>Does revocation change the legal entity of the business?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>No, the underlying entity remains the same with the Secretary of State; only the tax classification changes.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"What_should_owners_consider_before_revoking_S_Corp_status\"><\/span>What should owners consider before revoking S Corp status?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Potential tax consequences, capital accounts, shareholder consent, and long-term business strategy.<\/p>\n<\/div>\n\n\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t<\/div>\n\t\t[\/vc_column][\/vc_row]<\/p>\n<\/div>","protected":false},"excerpt":{"rendered":"<p>S Corps have relished being the class favorite for all kinds of reasons as stated in this book. However, the original C Corp could be making a comeback based on flawed logic from the Tax Cuts and Jobs Act of 2017[&#8230;]<\/p>\n","protected":false},"author":6,"featured_media":31224,"comment_status":"closed","ping_status":"closed","template":"","meta":{"_acf_changed":false,"footnotes":""},"epkb_post_type_1_category":[74],"epkb_post_type_1_tag":[],"class_list":["post-14028","epkb_post_type_1","type-epkb_post_type_1","status-publish","has-post-thumbnail","hentry","epkb_post_type_1_category-chap-6-s-corporation-election"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.8 (Yoast SEO v27.8) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Revoke S Corp Election - Terminating S Corp Election Issues - WCG CPAs &amp; Advisors<\/title>\n<meta name=\"description\" content=\"When you revoke S Corp election, there will be some accounting headaches and possible tax consequences with capital accounts or other assets. 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