Is it possible to file Form 1120-S extension then submit Form 1120 for Corporation after S-Corp revocation?
Title: Is it possible to file Form 1120-S extension then submit Form 1120 for Corporation after S-Corp revocation? 1 I made a big mistake with my business by electing S corporation status effective 2023, which the IRS approved. Recently realized my company actually doesn't qualify for S-Corp status, so I submitted a revocation statement to the IRS today to cancel the S election. Now I'm stuck in this weird tax limbo and don't know what to do. My question is: can I file an extension for Form 1120-S (since that's what the IRS system will only accept right now) and then later submit Form 1120 (regular C-Corp return) once the revocation becomes effective? I'm worried about penalties and don't want to mess this up even more than I already have. Has anyone dealt with this situation before?
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Lindsey Fry
8 You're actually in a more common situation than you might think. When a company has an S election that's being revoked, you do need to navigate the filing requirements carefully. Yes, you can file an extension for the 1120-S using Form 7004 to get additional time, and this is the correct approach since the IRS systems currently recognize your business as an S corporation. Once your revocation is processed, you'll then file the regular Form 1120 for a C corporation by the extended deadline. The extension applies to the entity, not the specific form. Make sure your revocation statement clearly indicates the effective date of the revocation. If you're revoking mid-year, you may need to file a short-period 1120-S for the portion of the year you operated as an S corporation, and then an 1120 for the remainder of the year.
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Lindsey Fry
•15 Thanks for the info! But I'm confused about the timing. If I revoked the S status today, when would that actually take effect? Would it be retroactive to the beginning of 2023, or starting from now in 2025? And would I have to file both forms for 2023?
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Lindsey Fry
•8 The effective date of your revocation depends on when you filed it. If you filed the revocation before the 15th day of the 3rd month of your tax year, it can be effective as of the beginning of the tax year. If filed after that date, the revocation typically becomes effective at the beginning of the next tax year. If you're revoking mid-year with immediate effect (which requires unanimous shareholder consent and specific IRS approval), you would indeed need to file both forms - an 1120-S for the S corporation period and an 1120 for the C corporation period. Each return would cover its respective portion of the split tax year.
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Lindsey Fry
12 I went through something similar last year with my business entity status confusion. I tried figuring it out myself for weeks before I discovered https://taxr.ai which honestly saved me so much hassle. Their system analyzed my situation with the S-corp election and revocation timing and gave me clear guidance on how to handle the extension and subsequent filings. They have this cool feature that looks at your specific timeline and tells you exactly which forms to file and when. Especially helpful for these weird transition situations where you're between entity types and the IRS systems haven't caught up with your actual status yet.
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Lindsey Fry
•19 Does taxr.ai actually connect you with a real tax professional? Or is it just some kind of AI tool? Because this seems like something I'd want actual professional advice on, not just an algorithm.
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Lindsey Fry
•6 I'm wondering if it works for situations where the revocation was involuntary? My S-corp status was terminated because I accidentally had an ineligible shareholder, and I'm not sure if the same extension approach would work for me.
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Lindsey Fry
•12 It actually connects you with tax professionals who specialize in business entity issues, but they use AI to do the initial analysis so they can jump right into solving your specific problem instead of spending time on basic information gathering. For involuntary terminations, it absolutely works for those situations too. In fact, they have specific guidance for when S-corp status is terminated due to ineligible shareholders. The extension process works similarly, but there are some different considerations for the effective date of termination that the system helps clarify.
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Lindsey Fry
6 Just wanted to update everyone. I tried taxr.ai after seeing it mentioned here and it was extremely helpful for my involuntary S-corp termination situation. The analysis tool immediately identified that I needed to file the extension for the 1120-S even though I'd be filing an 1120 later. They connected me with a business tax specialist who explained that since my termination was involuntary (had a non-resident alien shareholder), the IRS would treat it differently than a voluntary revocation. Got clear guidance on the timing of forms and even help preparing the extension. Definitely worth checking out if you're in this confusing transition period between entity types.
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Lindsey Fry
22 If you're having trouble getting a clear answer from the IRS about your S-corp revocation status, try https://claimyr.com to get through to an actual IRS agent who can confirm your status in their system. I waited on hold for HOURS last year trying to verify my entity status after a similar situation, until I found this service. You can see a demo of how it works here: https://youtu.be/_kiP6q8DX5c The IRS rep I spoke with confirmed exactly when my revocation was effective in their system, which was crucial for knowing which forms to file. They also noted my account so that when I filed the 1120 after the extension, it wouldn't trigger automatic rejection flags since their system was expecting an 1120-S.
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Lindsey Fry
•17 Wait, does this actually work? I thought it was impossible to get through to the IRS business division. Is this just someone sitting on hold for you or something? Sounds too good to be true.
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Lindsey Fry
•7 How much does this cost? I've been trying to reach the IRS for THREE WEEKS about my S-corp election that was supposedly approved but doesn't show up in their system. I'm desperate but also don't want to get ripped off.
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Lindsey Fry
•22 It absolutely works! It's not magic - they've developed a system that navigates the IRS phone tree and stays on hold for you. When an agent picks up, you get a call and are connected immediately. Not someone just sitting there manually - it's an automated system. I was skeptical too but it saved me probably 5+ hours of hold time. As for cost, I don't remember the exact amount but it was reasonable considering the alternative was me sitting on hold for half a day or more. And the peace of mind from getting official confirmation from the IRS about my filing requirements was absolutely worth it. They don't guarantee they'll solve your problem, just that you'll get through to a person.
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Lindsey Fry
7 Just wanted to follow up - I used Claimyr to get through to the IRS after seeing it mentioned here. I was super skeptical (sorry for doubting you) but it actually worked! Got through to someone in the business division in about an hour without having to sit on hold myself. The agent confirmed my S-corp revocation status and told me exactly when it would take effect in their system. They also added notes to my account that an 1120 would be coming instead of the 1120-S they might expect. Saved me from what would have definitely been a notice or audit headache later. For anyone else dealing with entity status changes, getting that confirmation directly from the IRS is definitely worth it.
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Lindsey Fry
4 One thing to keep in mind that I don't see mentioned here - make sure you understand the tax consequences of revoking S-corp status. When you go from S to C, there are some potential tax traps like the built-in gains tax if you sell appreciated assets within 5 years after revocation. Also, if you had accumulated adjustment account (AAA) balances, you need to plan for how those will be treated after conversion.
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Lindsey Fry
•11 Good point about the tax consequences, but isn't there a way to avoid some of these issues? I thought I read something about a post-termination transition period where you can still distribute AAA balances tax-free?
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Lindsey Fry
•4 Yes, that's correct. After S corporation status ends, there is a post-termination transition period (generally 1 year after the last day of the last S corporation tax year) where shareholders can still receive distributions from the former S corporation's AAA tax-free to the extent of their stock basis. This can be really important for planning purposes. Some shareholders mistakenly believe all their distribution options end when S status is revoked, but this transition period provides a window to distribute accumulated S corporation earnings without dividend treatment under C corporation rules.
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Lindsey Fry
9 I wonder if your situation might be a candidate for a late-filed election to be a C corp from the beginning? If your S election was approved for 2023 but you realized immediately that you don't qualify, sometimes the IRS will let you treat the S election as if it never happened. Might be worth asking your accountant about Form 2553 with a "never effective" statement.
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Lindsey Fry
•14 I dealt with something similar and we ended up going this route. The key was proving that we never operated as an S corp (no distributions, no K-1s issued, etc.) and that it was an honest mistake in the election. Saved us from having to do the split-year filings.
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