Buy with LLC then revoke S-corp status

[Stuart Mcormick]

Buying property with my LLC that's taxed as an S-corp. Since S-corp is a bad choice, I will revoke the S-corp status. Must I do that BEFORE I purchase the property? Or is it fine to just revoke the S-corp status at a future date, before I sell the property (if I ever sell it).

[Eamonn McElroy]

Revoking an S election means that your LLC is now a C Corp for federal income tax purposes.

To get back to disregarded entity, you must file an 8832 after revoking the S election, elect to be taxed as a DRE, and go through a corporate tax liquidation.  That's assuming the entity is eligible to make a check-the-box election and isn't constrained by the 60 month rule.

You should interface with your tax professional on this matter.  S Corps are easy to get into, but not fun to get out of.  It is perhaps the number one or number two mistake I see DIY taxpayers make -- electing S Corp when they really shouldn't.