Can I convert an S Corporation to a C Corporation?

You can convert an S corporation to a C corporation by revoking the S election. As a practical matter, assuming you really want to do this, you have a couple of approaches.

Approach #1: You can do something that causes the S corporation to lose its eligibility to be an S corporation. For example, you could sell one share of stock to an ineligible S corporation shareholder.

Approach #2: You can also officially revoke the S status by filing a statement of revocation with the Internal Revenue Service. You file the revocation statement with the IRS service center you've been sending your S corporation income tax return to. For example, if you usually file your S corporation tax return with the Ogden service center in Utah, you send your S corporation revocation to Ogden.

To intentionally revoke the "S" status of an S corporation, a majority of the S corp's shareholders need to agree to revoke the "S" status. If you have shareholders residing in community property states and these shareholder's shares are counted as part of the majority, these shareholder's spouses should agree to the revocation, too.

Currently, the IRS doesn't have a form for making the revocation. But you can create a revocation statement yourself or with a tax practitioner's help. The statement should include the number of shares outstanding at revocation date; the name, address and employer identification number of the S corporation; and the effective revocation date. The person who usually signs the S corporation income tax return should sign the statement.

The revocation statement should be delivered to the Internal Revenue Service by the 15th day of the third month of the tax year. For example, if you wanted to revoke your S corporation status as of January 1, 2011, you would want to file the revocation statement my March 15, 2011.

One final comment: You may (or may not) get an acknowledgement letter.

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