Wow! You guys are a wealth of information.

Here’s my question:

I built a commercial building in 2008. Started LLC with 6 members. Terrible timing!!! Lost money with no tenants for the last 3 years. Saw that I could elect to be treated as C corp, so held off filing (the 1120′s that I thought I could do), while I have been scrambling to avoid bankruptcy.

A few months ago I filed all years worth of 1120′s and the election form 8823. Woops! The IRS just sent me a letter saying can’t do the corporate election and I need to refile all years as 1065′s.

This creates a nightmare $30k worth of penalties for 6 (members) * 12 (months) * $195 (or $89 for other years) for not sending k1′s on time (that I didn’t think I needed to send…… Not to mention 6 people have to go back and do 4 years worth of amendments!

Do you have any thoughts? If the are only losses on the K1′s are they obliged to amend or can they ignore?

Can I escape this mess?

Thank you!