Jared Slipman Discusses the One-Stop-Shop Rule in The Legal Intelligencer

In his article “Understanding the One-Stop-Shop Rule: Navigating S Corporation Terminations and Revocations,” published in The Legal Intelligencer on September 4, 2024, tax attorney Jared Slipman discusses the “one-stop-shop” rule.

In recent years, S Corporations have become popular for their tax benefits and liability protections, but many business owners overlook the ongoing compliance requirements these corporations must meet. The regulations can be complex, with some rules being particularly obscure. A critical issue arises when an S Election is terminated or revoked, as the business may instead become a C Corporation.The one-stop-shop rule, contained in Treasury Regulations dealing with entity classification elections, and openly described on the first page of the instructions to Form 2553, mandates that if an entity eligible to make an election to be treated as an “association” taxed as a corporation under the entity classification election regulations files a Form 2553, it will be deemed to have elected first to become an association, followed by the S election. This rule can have serious tax implications.

The one-stop-shop rule is not just confounding, it can also result in significant tax consequences. 

Read the full article here.