I incorporated in August 2008. Other than the incorporating fees and a few office supplies, I had no other expense and also no income. I would like to use this losses to offset my profits on my sole proprietorship business.

I'll be filing my first tax return now in 2009, so I was wondering, if I apply for S status until march, 15th 2009, will I be able to file taxes for 2008 as an S corp or I'll have to file 2008 as C corp and only next year I'll be able to file as S corp for 2009?

Generally speaking, a corporation that files Form 2553 after the 15th day of the third month of its tax year but before the 15th day of the third month of the following tax year, the IRS considers the S-Corporation election to be valid only for the following tax year but not valid for the preceding tax year. Fortunately, a corporation can file Form 2553 late and still receive IRS approval to make the election retroactive to the beginning of the corporation's tax year. However, in order to qualify for relief from the late filing of Form 2553, the corporation must meet all of the following IRS requirements as follows:

1. The corporation meets the S-Corporation eligibility criteria,

2. The corporation intended to be classified as an S-Corporation as of the intended effective date of the S-Corporation election,

3. The corporation failed to qualify as an S-Corporation solely because it did not file Form 2553 in a timely manner,

4. Less than 24 months have passed since the original due date of Form 2553,

5. The corporation either has reasonable cause or inadvertently failed to file Form 2553 in a timely manner,

6. The corporation has not yet filed tax returns for the first tax year for which it intended to file as an S-Corporation, or the corporation has filed its first tax return using Form 1120S and the shareholders properly reported their share of income in a manner consistent with the corporation's intention to be an S-Corporation,

7. Form 2553 is filed not later than 6 months after the due date (without regard to extensions) of the first tax return for which the corporation intended to file as an S-Corporation, and

8. Shareholders and other taxpayers have not reported their income in a manner inconsistent with the corporation's intention to file as an S-Corporation.

Thus, if your corporation meets these requirements, then your corporation should file "IRS Form 2553 by writing at the very top of the form the following words: "FILED PURSUANT TO REV. PROC. 2003-43" and attach a statement indicating that the corporation either had reasonable cause (you should describe these in detail) or inadvertently failed to file Form 2553 in a timely manner."

In addition, both Form 2553 and the attached statement must be signed by each and every single shareholder.

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