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2553 Election by a Small Business Corporation Form

(Rev. Nov. 1976)

Department of the Treasury 

Internal Revenue Service (As to taxable status under subchapter S of the Internal Revenue Code) (See instruction F)

Note: 

Principal business activity 

(see Instruction E)

Employer identification number 

(see Instruction K)

Name of corporation

Election is to be effective for 1 

taxable year beginning (Month, 

day, year)

Number and street

Number of shares issued and 

outstanding

City or town, State and ZIP Code

Yes No. If “Yes” state name of Date and place of incorporation Is the corporation the outgrowth or continuation of any form of predecessor?

---------------------------------------------- predecessor, type of organization, and period during which it was in existence

If this election is effective for the first taxable year the corporation is in existence, submit the following information:

Annual return will be filed taxable 

year ending (Month)

Date corporation first had shareholders Date corporation first had assets

Stock Social Security Internal Revenue Service Center 

where individual return is filed Name and address (including ZIP code) of each shareholder Number

1

10

Note: For this election to be valid, the consent of each shareholder must accompany this form or be shown below. See instruction D.

Date 19

Shareholders' statement of consent (May be used in lieu of attachments—instruction D)

We the undersigned shareholders consent to the election of the above corporation to be treated as an “electing small business corporation” under section 1372(a).

Signatures of shareholders and date

1

2

3

4

5

File in

duplicate

This election under section 1372(a) (with the consent of all your shareholders) to be treated as an “electing small business corporation” for income tax purposes may be made 

only if the corporation meets all six of the requirements stated in instruction A. See section 1372 which describes certain conditions whereby the status of an electing small 

business corporation may be revoked or terminated.

Date corporation began doing business

Number of

shares

Date(s) acquired

(see instruction D)

2

4

5

6

7

8

9

3

Under penalties of perjury, I declare that I have examined this election, including accompanying schedules and statements, and to the best of my knowledge and belief it is true, 

correct and complete.

Signature and

Title of Officer

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Purpose

(References are to the Internal Revenue Code.)

D. Shareholder's statement of consent—.On the 

date of election, each shareholder may consent to the 

election either by signing at the bottom of Form 2553 or 

by signing a separate statement which must be attached 

to Form 2553 and must include: The purpose of this election is to permit the 

undistributed taxable income of an “electing small 

business corporation” to be taxed to the shareholders 

rather than the corporation. The term “undistributed 

taxable income” means taxable income (as computed 

under section 1373(d)) minus the sum of (1) the tax 

imposed by sections 56 and 1378(a) and (2) the amount 

of money distributed as dividends out of earnings and 

profits of the taxable year.

Instructions

A. Corporations eligible to elect.—The corporation 

may make the election only if it meets all six of the 

following requirements:

It is a domestic corporation.

Note: A small business corporation which has 

been an electing small business corporation for a 

period of 5 consecutive taxable years or more may 

have more than 10 shareholders (but not more 

than 15). If during this 5-year period, the number 

of shareholders increases to an amount in excess 

of 10 (but not more than 15) solely by reason of 

additional shareholders who acquired their stock 

through inheritance, the corporation may have a 

number of additional shareholders equal to the 

number by which the inheriting shareholders 

cause the total number of shareholders of such 

corporation to exceed 10. See section 1371(e). 

This provision is effective for taxable years 

beginning after December 31, 1976.

See section 1371(c) for details as to when 

stock is treated as being owned by one 

shareholder when held by husband and wife, 

estate of the deceased spouse and the surviving 

spouse, or estates of both spouses.

It has only individuals or estates as shareholders. 

(Effective for taxable years beginning after 

December 31, 1976, see section 1371(f) wherein 

certain trusts may be permitted as shareholders.)

It has no nonresident alien shareholders.

It has only one class of stock.

It is not a member of an affiliated group of 

corporations (as defined in section 1504).

Note: A corporation is not considered a member of an 

affiliated group if it owns stock in a corporation that has 

not begun business before the close of the taxable year 

to which the election applies and does not have taxable 

income during that year.

B. When to make the election—.Complete this form 

and file it for any taxable year during either (1) the first 

month of that year, or (2) the month before the first 

month. For example, a calendar year corporation must 

make the election either in January of the tax year it 

applies to or in the preceding December.

For this purpose, the first month of a new corporation's taxable year begins when it has shareholders, 

acquires assets, or begins doing business, whichever 

happens first.

If a new corporation's taxable year begins after the 

first day of a month, the term “month” is the period 

beginning with the first day of the taxable year and 

ending with the close of the day preceding the same date 

of the following calendar month. If there is no such 

corresponding date, the month ends with the last day of 

that following calendar month. For example, if the new 

corporation's tax year began on March 17, the election 

must be filed by April 16. But if it began on March 31, the 

election must be filed by April 30.

The election will be effective for the taxable year for 

which it is made and for all later years unless it is 

terminated or revoked under section 1372(e).

C. Valid election—.The election will be valid only if 

consented to by all persons who are shareholders on the 

first day of the corporation's taxable year or on the day of 

election, whichever is later.

the name and address of the corporation and of 

the shareholder

the number of shares of stock owned by the 

shareholder

the dates the shares were acquired

a statement that the shareholder consents to the 

corporation's election to be treated as a small 

business corporation under section 1372(a).

The consent must be sighed by both husband and 

wife if they have a community interest in the stock or the 

income from it, and by each tenant in common, each joint 

tenant, and each tenant by the entirety.

The consent of a minor shall he made by the minor or 

the minor's legal guardian, or the minor's natural 

guardian if no legal guardian has been appointed (even 

in the case of stock held by a custodian for a minor under 

a statute patterned after the Uniform Gifts to Minors Act).

Space on Form 2553 relating to dates the 

shareholders' stock was acquired need be filled in only 

for those shareholders using the consent shown on the 

face.

New Shareholder—.Effective for taxable years 

beginning after December 31, 1976, a subchapter S 

election will not be terminated unless a new shareholder 

(any person who was not a shareholder on the first day of 

the first taxable year for which the election is effective, or 

on the day on which the election is made, whichever is 

later) affirmatively refuses to consent to the election on or 

before the 60th day after which the new shareholder 

acquired the stock.

The new shareholder's affirmative refusal to consent 

to the election must he filed with the Internal Revenue 

Service Center having jurisdiction for the area in which 

the principal business, office or agency of the corporation 

is located.

If the new shareholder is the estate of a decedent, the 

60 day period for affirmatively refusing to consent to the 

election shall expire on the 60th day after (1) the day on 

which the executor or administrator of the estate 

qualifies, or (2) the last day of the taxable year of the 

corporation in which the decedent died, whichever is the 

earlier.

Any termination of an election by reason of the 

affirmative refusal of any person to consent to such 

election shall be effective for the taxable year of the 

corporation in which such person becomes a shareholder in the corporation and for all succeeding taxable 

years of the corporation. (See section 1372(e)(1).)

For taxable years beginning prior to January 1, 1977, 

a new shareholder must file a statement of consent to the 

election made on Form 2553, or else the election is 

terminated. See section 1.1372-3(b) and (c) of the 

regulations for requirements concerning the time and 

manner of filing this statement of consent.

E. Principal business activity—.In reporting the 

principal business activity give the one business activity 

that accounts for the largest percentage of “total 

receipts.” “Total receipts” means gross sales and/or 

gross receipts, plus all other income. State the broad field 

of business activity as well as the specific product or 

service. For example, “Mining copper,” “Manufacturing 

cotton broad woven fabric,” “Wholesale food,” or “Retail 

apparel.”

G. Signature—.This form must be signed by the 

president, vice president, treasurer, assistant treasurer, 

chief accounting officer, or any other corporate officer 

(such as tax officer) who is authorized to sign.

H. Election after termination or revocation.—If a 

corporation election has been terminated or revoked 

under Section 1372(e), see section 1372(f) and section 

1.1372–5 of the regulations for the restrictions on 

eligibility to make a new election.

I. Investment credit property.—Section 47 and the 

regulations thereunder provide that investment credit 

property ceases to be investment credit property when a 

corporation makes a valid election under section 1372 to 

be an “electing small business corporation” and the tax 

recomputation provisions of section 47 will apply.

The corporation and its shareholders may, however, 

execute the agreement specified by section 1.47–4(b)(2) 

of the regulations that the recapture provisions of section 

1.47-1(a) of the regulations will not apply to the section 

38 property.

J. Work incentive (WIN) program credit.—Section 

1.50A-5(b)(1) of the regulations provides that certain WIN 

wages for which the WIN credit was claimed will cease to 

qualify as WIN wages when a corporation makes valid a 

election under section 1372 to be an “electing small 

business corporation.” Therefore, the recapture 

provisions of section 1.50A–3 of the regulations will 

apply.

The corporation and its shareholders may, however, 

execute the agreement specified by section 

1.50A–5(b)(2) of the regulations so that the recapture 

provisions of section 1.50A–3 of the regulations will not 

apply to the WIN expenses because of the corporation's 

election under section 1372.

K. Employer identification number.—Corporations 

that have not applied for an employer identification 

number should enter “not applied for”. If a number has 

been applied for but not received, enter “applied for.”

Corporations who do not have an ID should apply for 

one on Form SS-4, available from any IRS or Social 

Security Administration office. Send Form SS-4 to the 

same Internal Revenue Service Center to which Form 

1120 is sent.

If the corporation's principal 

business, office, or agency is 

located in Use this address

New Jersey, New York City

and counties of Nassau,

Rockland, Suffolk, and

Westchester

New York (all other counties), 

Connecticut, Maine, 

Massachusetts, New 

Hampshire, Rhode Island, 

Vermont

Alabama, Florida, Georgia

Mississippi, South Carolina

Michigan, Ohio

Arkansas, Kansas,

Louisiana, New Mexico,

Oklahoma, Texas

Alaska, Arizona, Colorado,

Idaho, Minnesota, Montana,

Nebraska, Nevada, North

Dakota, Oregon, South

Dakota, Utah, Washington,

Wyoming

Illinois, Iowa, Missouri,

Wisconsin

California, Hawaii

Indiana, Kentucky, North

Carolina, Tennessee,

Virginia, West Virginia

Delaware, District of

Columbia, Maryland,

Pennsylvania

1040 Waverly Avenue

Holtsville, New York 11799

310 Lowell Street

Andover, Mass. 01812

4800 Buford Highway

Chamblee, Georgia 30006

Cincinnati, Ohio 45298

3651 S. Interregional Highway

Austin, Texas 78740

1160 West 1200 South Street

Ogden, Utah 84201

2306 E. Bannister Road

Kansas City, Missouri 64170

5045 East Butler Avenue

Fresno, California 93888

3131 Democrat Road

Memphis, Tennessee 38110

11601 Roosevelt Boulevard 

Philadelphia, Pa. 19155

It has no more than 10 shareholders.

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If you wish, you may incorporate the consents of all 

shareholders in one statement. 

F. Where to file—.File this election in duplicate with 

the Internal Revenue Service Center where the 

corporation will file Form 1120S U.S. Small Business 

Corporation Income Tax Return. A copy should also be 

retained for permanent files of the corporation.