How to File for an S Corp in Tennessee

By Thomas King

Most corporations are taxed twice. First at the corporate level and then at the shareholder level. An S corporation -- sometimes called an S corp -- is a corporation that has elected to be taxed under Subchapter S of the U.S. Tax Code. This means that the corporation is taxed only once (at the shareholder level), just like partnerships and sole proprietorships. To file for S corp status in Tennessee, your corporation must meet certain requirements and you must submit the proper paperwork.

Step 1

Determine if your corporation meets the requirements to file as a S corp in Tennessee. Your business must be a domestic corporation incorporated in Tennessee. The company must have one class of stock, meaning that no stock is inherently worth more than another stock (i.e., no stock has a higher claim on the assets and earnings of the corporation than another stock). In addition, the corporation can have no more than 35 shareholders. And all shareholders must be either individuals, estates, or trusts -- in other words, partnerships and corporations cannot be shareholders. No shareholders can be nonresident aliens.

Step 2

Obtain consent from the shareholders to S corp status. A corporation cannot file as a S corp without unanimous shareholder consent.

Get a free, confidential bankruptcy evaluation. Learn More

Step 3

Navigate to the Forms and Instructions section of the Internal Revenue Service website and click "Form 2553."

Step 4

Fill out Part I of the form. The form is self explanatory. However, there are some items to note. The Employer Identification Number asked for in box A is your corporation's EIN. If your corporation has applied, but not received an EIN, type "applied for." Box K must include the signatures of every single shareholder who owns or will own stock at the time the election is made.

Step 5

Fill out Part II of the form. Note that Part II need only be completed if you selected a tax year ending on any date other than December 31.

Step 6

Fill out Part III of the form. Note that Part III is applicable only if one of the shareholders of your corporation is a qualified Subchapter S trust. A qualified Subchapter S trust has only one income beneficiary, who is a U.S. citizen or resident, and all income of the trust is required to be distributed to only one income beneficiary.

Step 7

Print out and mail the entire form to: Internal Revenue Service 324 25th St. Ogden, UT 84401

Get a free, confidential bankruptcy evaluation. Learn More
S Corporation Regulations



Related articles

How to Convert to S Corp From Sole Proprietor

A sole proprietor may benefit from converting to an S Corporation. While a sole proprietor is personally liable for business debts, shareholders of an S Corporation are not liable for the corporation’s liabilities. Neither business structure pays income taxes directly; instead, sole proprietors and S corporation shareholders both declare income earned by the business on their personal tax returns.

Implications of Being a 50 Percent Shareholder in an S-Corp

An S-corporation isn’t a legal business entity you can create at the state level; it is purely a designation that certain small businesses can elect for income tax purposes. In most cases, corporations make S-corp elections because it allows them to avoid corporate double taxation and take advantage of pass-through taxation instead. As a 50 percent owner of an S-corp, you’ll be reporting half of a corporation’s net profit or loss on your personal income tax return.

What Are the Disadvantages of an Irrevocable Trust?

A trust is a legal device that permits a grantor to place assets under the control of a trustee, then who administers the assets for the benefit of beneficiaries named by the grantor. A living trust is a trust created while the grantor is still alive -- as opposed to a testamentary trust, which is created by the terms of the grantor's will. A trust is irrevocable if the grantor cannot unilaterally revoke it.


Related articles

Can a Trust Own an S Corp?

An S corporation is a business that elects to obtain a special tax status granted by the IRS. Most businesses that can ...

Can Living Trusts Own S Corporation Stock?

An S corporation is simply an ordinary corporation chartered under state law whose shareholders have decided to make a ...

How Is Passive Income Taxable to an S Corporation Shareholder?

A chief benefit of being an S Corporation is that it allows the corporation’s shareholders to be taxed directly on all ...

Definition of a C-Corporation

Classification of a corporate entity as a C corporation rests entirely on whether it’s subject to the income tax rules ...

Browse by category
Ready to Begin? GET STARTED