Hello gentlemen,
First off, thank you for the priceless insights and information you share. It’s awesome to hear what other advisors are doing for their clients.
I just listened to your S Election episode, #527 and have some thoughts I wanted to share and get your opinion on.
Very early in the episode there is talk about making the s election for an LLC. You mention making the election on form 8832 in conjunction with the 2553. I just wanted to point out that per IRS regs it is not strictly necessary to do so and may lead to some unintended consequences in some instances. This article from Tax Advisor lays out my thoughts fairly well and more succinctly than I would be able to.
https://www.thetaxadviser.com/issues/2020/apr/electing-s-status-llc.html
I am curious if you have additional information for reasons why the 8832 would be required? I have not filed one in about 8 years and have not had any problems with making the s election for an LLC, including late filings. I am genuinely curious because I don’t want to leave my clients exposed unnecessarily.
On another note, I was pleased, in fact I verbally exclaimed; “YES”! to hear about your level of income for making the s-election. I have been routinely moving clients to s at about the $50k mark for exactly the reasons you stated in the episode, namely that at that point the client breaks even on the admin costs while returning a bit of cash to their pocket. It’s nice to hear that other professionals are being aggressive with their tax planning and really trying to save their clients from paying excess taxes. I, assumedly like you, believe that most of us know better how to invest out money than politicians and bureaucrats.
Would love to hear back if possible, though I realize you have many listeners with a lot of questions.
Best of luck and thank you again for the excellent content.
Chris Nash, CPA