One thing nobody has mentioned is that Missouri has some specific state-level considerations for S-corps that differ from some other states. I'm a MO agent too, and our state taxes S-corps a bit differently than sole props. Make sure whoever you work with is familiar with MO specifically. Also, did your CPA mention anything about how the 20% QBI deduction factors into this decision? That's another big piece of the S-corp vs LLC analysis that might affect your choice.

Great point about Missouri-specific considerations! The QBI deduction interaction is crucial and often overlooked. For S-corps, the QBI deduction applies to your business income MINUS the W-2 wages you pay yourself. So if you're paying yourself a high salary (like that 70% some CPAs recommend), you're reducing the income eligible for the 20% QBI deduction. This creates an interesting balance - you want your salary high enough to avoid IRS scrutiny but not so high that you lose significant QBI benefits. In many cases, this actually supports the 50-60% salary range that others have mentioned here. Missouri also doesn't conform to federal S-corp elections automatically, so you need to make a separate state election. Plus MO has that franchise tax for S-corps that LLCs don't pay. These state-level costs should definitely factor into your breakeven analysis. I'd recommend running the numbers with both federal AND Missouri tax implications included. The total picture might be different than just looking at federal savings alone.

Just a heads up on something that surprised us during our C to S conversion last year - the Accumulated Adjustments Account (AAA) tracking became really important. After conversion, you'll need to carefully track AAA which is basically the post-conversion retained earnings that have already been taxed at the shareholder level. When you eventually distribute proceeds from property sales, the ordering rules for distributions can get tricky between AAA, accumulated E&P from the C corp days, and other sources. Our accountant messed this up initially and it almost resulted in some distributions being incorrectly taxed as dividends when they should have been tax-free returns of already-taxed income.

One thing I haven't seen mentioned yet is the potential impact of state taxes on this strategy. While the federal tax benefits of converting from C corp to S corp are well-documented, some states don't recognize S corp elections or have their own built-in gains taxes that could significantly impact your overall tax savings. For example, some states will continue to tax the entity as a C corporation even after federal S election, which could eliminate much of the benefit you're hoping to achieve. Other states have their own recognition periods or different rules for built-in gains. Given that you're dealing with real estate, you'll also want to consider whether your state has any special provisions for real estate held in corporate entities. Some states have additional taxes or fees for corporations holding real property that could affect your cost-benefit analysis. I'd strongly recommend getting state-specific advice from a tax professional familiar with your jurisdiction before moving forward with the conversion. The federal tax savings could be completely offset by unexpected state tax consequences.

Another option to consider is leasing instead of buying. My brother runs a transportation service for people with disabilities and he found that leasing the handicap vans gave him better tax advantages in his situation. The entire lease payment was deductible as a business expense (for the business use percentage), and he didn't have to worry about depreciation calculations. Just something to think about if you're not set on owning the vehicle outright!

Don't forget to look into potential ADA tax credits too! If your business qualifies as a "small business" under ADA guidelines (generally under $1 million in revenue or fewer than 30 employees), you might be eligible for the Disabled Access Credit, which could cover some of the cost of the accessibility modifications to the van. It's IRS Form 8826, and it can be taken in addition to your regular business deduction for the vehicle. It's specifically designed to help small businesses cover the costs of making services accessible to people with disabilities.

Another thing to consider - if you have zero activity, you can file for "Administrative Dissolution" in many states which is much simpler than the full process. Basically you stop filing annual reports with the state and they eventually dissolve you automatically. Downsides: 1) Takes longer 2) You might get hit with penalties before dissolution 3) Still need to file final federal returns But some people find it easier than the formal process.

I went through this exact same situation last year with my dormant S-Corp. One thing that really helped me was creating a dissolution timeline and checklist before starting anything. Here's what worked for me: 1. First, I verified all prior year returns were filed (as Hassan mentioned - super important!) 2. Filed Form 966 within 30 days of formally adopting the dissolution plan 3. Used 2023 forms for my final 1120-S and K-1, clearly marked "FINAL RETURN - SHORT TAX YEAR" at the top 4. Attached a brief statement explaining the dissolution date and why I was using prior year forms The key thing I learned is that the IRS is very familiar with this timing issue. As long as you're clear about what you're doing and why, they handle it routinely. One tip: even though there was zero activity, I still had to complete all the required sections of the forms. Don't leave anything blank - put zeros where appropriate and make sure all signature lines are completed. The IRS can reject incomplete forms even if the amounts are all zero. Also double-check your state requirements! Some states want you to file state dissolution paperwork before the federal forms, others don't care about the order.

Has anyone tried using the IRS Withholding Calculator instead of paying for one of these services? I'm wondering if it's worth the effort or if it gives similar results.

I went through this exact same situation last year! The key issue is that when you're both working and select "married filing jointly" on your W-4s, each employer calculates withholding as if that job is your only household income. This creates a significant under-withholding problem. Here's what worked for us: We used the IRS Tax Withholding Estimator and discovered we needed to add about $200 extra withholding per month total. We split this between our two paychecks - I added $75 extra on line 4(c) of my W-4, and my spouse added $125 on theirs. The math makes sense when you think about it - at your combined income of ~$132K, you're hitting higher tax brackets that neither employer accounts for individually. Don't feel bad about not knowing this - the current W-4 system is really confusing for dual-income households. Once we made the adjustment, our withholding was spot on for this tax year. I'd definitely recommend running your numbers through the IRS calculator first since it's free and gives you the exact amounts to put on your W-4 forms. Good luck!