Understanding Your CP261 Notice
CP261 is the approval notice for Form 2553, Election by a Small Business Corporation.
What you must do
- Keep this S corporation approval letter (CP261 Notice), in your permanent records.
- Timely file Form 1120S, U.S. Income Tax Return for an S Corporation (.pdf), reporting income/loss for the S corporation including Schedules K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. (.pdf), for all shareholders.
- Timely file all employment tax returns.
You may want to
- If your address changes, submit Form 8822-B, Change of Address or Responsible Party – Business (.pdf), to ensure our records are correct.
Answers to common questions
Why is the effective date of the election different from what I submitted on Form 2553, Election by a Small Business Corporation (.pdf)?
You did not timely file Form 2553 for the effective date requested.
Can I have the effective date changed?
Relief may be available through the following revenue procedure:
- Rev. Proc. 2013-30 (.pdf)
How do I request a private letter ruling (PLR)?
The instructions for requesting a PLR are in the first Internal Revenue Bulletin of each calendar year. See IRB 2015-1 (.pdf)
Links that you may find useful
- S Corporations
- Form 1120S, U.S. Income Tax Return for an S Corporation
- S Corporation Compensation and Medical Insurance Issues
- S Corporation Employees, Shareholders and Corporate Officers
- S Corporation Stock and Debt Basis
- Special Rules for Health Insurance Costs of 2-Percent Shareholder-Employees (IRB 2008-2 Notice 2008-1)
- Publication 542, Corporations (.pdf)