Automatic relief for certain late S corp shareholder consents.

• Position: IRS News - Brief Article

Stuart R. Josephs, CPA, of the San Diego-based Tax Assistance Practice, reports that Rev. Proc. 2004-35 (IRB 2004-23, 6/7/04) provides automatic approval for late filing of consents, by spouses of S corporation shareholders in community property states, to the corporation's election to be an S corp.

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An election to be an S corp is valid only if all persons, who are the corporation's shareholders on the day on which the election is made, consent to this election.

If the corporation's stock is owned by a husband and wife as community property (or the income from the stock is community property), each person having a community interest in the stock (or that income) must consent to the election.

This automatic relief is available if:

* The S corp election is invalid only because the election (on Form 2553) did not include the signature of a community property spouse who was a shareholder solely pursuant to state community...