July 1, 2025
The decision for a Limited Liability Company (LLC) to revoke its S corporation election initiates a cascade of complex federal tax consequences that are frequently misunderstood by business owners and their advisors. The root of this complexity lies not in the revocation itself, but in the foundational tax law governing entity classification. To comprehend the ramifications of undoing an S election, one must first grasp the distinct legal and tax identities of an LLC and the fundamental change that occurs when an S election is made.
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