Form with which a corporation may resolve to alter its corporate status top that of a subchapter (S) corporation.
S Corporation With Passive Income In Washington
State:
Multi-State
Control #:
US-0046-CR
Format:
Word;
Rich Text
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FAQ
Start with Schedule E, then use Form 8582, Passive Activity Loss Limitations, to summarize income and losses from passive activities, and to compute the deductible losses and any non-deductible losses to be carried forward to future years.
Because of the one-class-of-stock restriction, an S corporation cannot allocate losses or income to specific shareholders. Allocation of income and loss is governed by stock ownership, unlike partnerships or LLCs taxed as partnerships where the allocation can be set in the partnership agreement or operating agreement.
Some jurisdictions—the District of Columbia, Louisiana, New Hampshire, New York City, Tennessee, and Texas—do not recognize the federal S corporation election and, for the most part, tax S corporations like other business corporations.
Keep in mind that while Washington does not have personal or corporate income tax, an S Corp may be subject to a gross receipts taxes (such as the business and occupation or B&O tax) and other state or local taxes.
In Washington, an S corporation is treated as a regular C corporation for state tax purposes because the state does not recognize the federal S corporation election.
FL, SD and WY are typically the best for no personal/business taxes. Nexus rules still apply to other states.
How to Start an S-Corp in Washington Step 1 – Choose a Name. Step 2 – Appoint a registered agent. Step 3 – File a Washington Certificate of Formation. Step 4 – Create an operating agreement. Step 5 – Apply for an EIN. Step 6 – Apply for S Corp status with IRS Form 2553.