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second preceding period (base year) recalculated Organizations are also encouraged to review Tax Can the election not to be taxed as an did not elect to file as a corporation with the IRS is
based on current rates and law. This value may be Bulletins 53e, 53f, 53C and 53B, available on the S corporation ever be revoked? not subject to corporate net income tax, and
used as a basis for making current-year estimated department’s website, or call 717-783-6052, for Once this election is made, it cannot be revoked for therefore is not required to file RCT-101.
prepayments. failure to make adequate estimated further information on going out-of-existence or five years unless the taxpayer becomes a qualified
prepayments could result in the imposition of withdrawing from doing business in PA. subchapter S subsidiary. Does PA follow federal LLC laws?
Yes. LLCs that do not elect to file as corporations
additional interest. Such requests must be made in writing to the with the IRS are exempt from corporate net income
What are the filing requirements for inactive
Bureau of Corporation Taxes and submitted within tax. LLCs classified as federal corporations –
What is the corporate net income tax sales corporations? the first 75 days of the tax year in which including restricted professional companies – are
factor? A corporate tax return must be filed as long as an reinstatement to PA S status is requested. each subject to corporate net income tax.
Corporations doing business and subject to tax in organization remains a registered corporation, request must contain the name of the corporation,
more than one state are required to apportion even if no business was conducted. In such a case, federal eIN, Revenue ID number and the effective Are there advantages to organizing as an
income when calculating PA tax liabilities or PA net RCT-101-I, Inactive PA Corporate Net Income Tax date of revocation. LLC?
operating losses. The corporate net income tax Report, must be filed. A corporation with any Advantages and disadvantages to doing business
each request must be signed by at least 51 percent
apportionment formula is based on sales activity, real property, other assets or income is not as an LLC vary depending on the type of business.
of a corporation’s shareholders. each shareholder
attributable to PA. considered inactive. Individuals considering doing business as an LLC
should also indicate his/her percentage of stock
What is a net operating loss? ownership in the corporation. The revocation letter are encouraged to consult legal and/or accounting
PA’s net operating loss (NOL) carry-forward allows SUBCHAPTER S CORPORATIONS should be sent to the following address: professionals to determine if this type of
organization is appropriate.
corporate taxpayers to deduct losses from one year for tax years beginning after Dec. 31, 2005, an PA DePARTmeNT Of ReVeNue
from profits in subsequent years. Losses can be entity with a valid federal Subchapter S status is BuReAu Of CORPORATION TAXeS What kind of PA tax return does an LLC file?
carried forward and deducted from profits for up to automatically considered a PA S corporation. PO BOX 280701 If the LLC is classified as a corporation for federal
HARRISBuRg PA 17128-0701 income tax purposes, it is subject to PA Corporate
20 subsequent tax periods. See ReV-1200, PA An S corporation can reduce its tax liability because
Net Income Tax andmust complete the RCT-101. If
Corporate Net Income Tax Instructions, for the income earned is not taxed at the 9.99 percent If a federal S corporation has been taxed
an LLC is classified as a partnership, it must also
additional information. corporate net income tax rate; rather income is as a PA C corporation prior to tax years
file an Information Return, PA-20S/PA-65.
How does a company go out-of-existence or passed through to shareholders who pay PA beginning after Dec. 31, 2005, must
withdraw from doing business in PA? personal income tax on the business income at the REV-976 still be filed?
rate of 3.07 percent. Shareholders of S Yes. ReV-976, election Not to Be Taxed as a PA S
The corporation should indicate on its Corporate
corporations include their shares of income, loss or Corporation, must be filed regardless of any prior
Tax Report, RCT-101, that the report is a final revocation or termination of PA S status.
credit on their personal income tax returns.
report. ReV-861, Schedule DA, Disposition of
Assets, may also be required if the corporation held An S corporation is subject to corporate net income
any assets during the year. tax only to the extent of its built-in gains. LIMITED LIABILITY COMPANIES
LLCs provide limited personal liability to their
for tax periods beginning prior to Jan. 1, 2002, or members and may be formed with one or more
What if a federal Subchapter S corporation
for tax periods beginning on/after Jan. 1, 2002, for members. To establish an LLC in PA, a certificate of
wishes to be taxed as a PA C corporation?
which an RCT-101 was filed but was not marked as organization must be filed with the PA Department
A federal Subchapter S corporation that wishes to
final, ReV-238, Out of existence/Withdrawal of State.
be taxed as a PA C corporation must elect not to
Affidavit, should be filed.
be taxed as a PA S corporation using ReV-976. This A restricted professional company is a unique type
Companies dissolving through or withdrawing from election must be signed by all shareholders and of LLC formed by one or more licensed
the PA Department of State must file ReV-181, filed on or before the due date or extended due professionals who restrict their practice to
Application for Tax Clearance Certificate. date of RCT-101. medicine, law or accounting. Such a company that
www.revenue.pa.gov
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