Tax Return Elections, Including Federal Status Elections, Alternative Treatment Elections, or Other Types of Elections Applicable to an Individual or Entity's Tax Return Flashcards
Under the “check the box” regulations
an entity is given a default tax treatment. No election is required to receive the default tax treatment.
However, entities other than corporations can elect alternative treatment by filing IRS Form 8832 no later than 75 days after the beginning of the tax year in which the election is to be effective
If the entity does not file IRS Form 8832 and is a domestic LLC with at least two members
the entity will be classified as a partnership
The 2014 IRC Section 179 deduction
was $500,000/$2,000,000 with a 50% bonus depreciation
On 1/1/15 the extension for 2014 lapsed and is now at $25,000/$200,000 with 0% bonus depreciation
A single member entity
is disregarded as separate from their owner
Therefore, an LLC with one member may submit IRS Form 8832 (Entity Classification Election) and elect to be a corporation or a disregarded entity for federal tax purposes
First-year depreciation under MACRS
is based on double-declining balance (150% for Farmers)
when a purchase was made in December, the mid-quarter convention is used
S corporations terminate
An election terminates automatically in certain situations
a vote of 50% of shares plus one share agrees to terminate
the revocation may specify a revocation date that is on or after the date the revocation is filed
IRS Publication 946 discusses the rules pertaining to the business-use requirement of listed property
If the property is not used predominantly (more than 50%) for qualified business use, the taxpayer cannot claim the Section 179 deduction or a special depreciation allowance.
In addition, the taxpayer must figure any depreciation deduction under the modified accelerated cost recovery system (MACRS) using the straight-line method over the ADS recovery period
