To know if your corporation is an S corp or a C corp, look at the form number on its most recent federal income tax return: Form 1120 means it’s a C corporation, and Form 1120-S means it’s an S corporation. Every corporation starts as a C corp by default and only becomes an S corp after someone filed Form 2553 and the IRS accepted the election.1Internal Revenue Service. About Form 2553, Election by a Small Business Corporation If you can’t put your hands on a return, the IRS acceptance letter, a shareholder K-1, or a quick call to the IRS will each answer the question.
Check the Tax Return First
The form title is printed at the top of page one. Form 1120 is called “U.S. Corporation Income Tax Return” and is filed by C corporations, which pay tax at the corporate level.2Internal Revenue Service. Instructions for Form 1120 (2025) Form 1120-S is “U.S. Income Tax Return for an S Corporation,” and the corporation generally owes no federal income tax itself; income and losses pass through to the shareholders’ personal returns.3Internal Revenue Service. Instructions for Form 1120-S (2025)
If your accountant prepared the return, the cover letter or transmittal will name the form too. Look at last year’s filing and you have your answer.
A second giveaway sits in the shareholders’ personal tax records. S corporations issue a Schedule K-1 (Form 1120-S) to each shareholder every year, reporting that person’s share of income, deductions, and credits.4Internal Revenue Service. About Form 1120-S, U.S. Income Tax Return for an S Corporation C corporation shareholders don’t get K-1s. They only see a Form 1099-DIV if the board declared a dividend. If K-1s from the corporation show up in your personal file each spring, you’re an S corp shareholder.
Look for the IRS Acceptance Letter
When the IRS accepts a Form 2553 election, it mails a CP261 notice to the corporation’s address on file confirming the effective date of S corp status. If the IRS approves the election with a non-standard tax year, the notice may be a CP277 instead. That letter is the closest thing to a certificate of S corp status the IRS issues, and it belongs in the corporate minute book.
Because C corp is the default classification, there is no equivalent acceptance letter for a C corporation. The one exception is an entity that filed Form 8832 to elect corporate tax treatment from a different starting point, which is common for LLCs that chose to be taxed as corporations.5Internal Revenue Service. Form 8832 Entity Classification Election Instructions If you cannot find a CP261, a CP277, or a copy of a filed Form 2553 anywhere in the records, and nobody remembers filing one, the corporation is almost certainly a C corp.
Board minutes and shareholder resolutions sometimes record the decision to elect S status and include the signed shareholder consents that the election requires. Those documents show intent, not IRS acceptance, but they narrow the search when the file is thin.
Get a Transcript or Call the IRS
When the internal records are incomplete or you’ve inherited a corporation with a foggy history, ask the IRS directly. The IRS Business and Specialty Tax Line is 800-829-4933.6Internal Revenue Service. Telephone Assistance Contacts for Business Customers The caller has to be an authorized person, meaning a corporate officer on file or someone with a valid Form 2848 Power of Attorney. Have the EIN ready.
You can also pull a business tax transcript, which shows which return forms the IRS has actually processed for the corporation. The transcript will list either Form 1120 or Form 1120-S and settle the question outright. Three routes get you there: view it through the IRS Business Tax Account online, mail Form 4506-T, or call the business tax line.7Internal Revenue Service. Get a Business Tax Transcript Online is fastest if you already have an account set up. Mailed requests take two to three weeks for electronically filed returns and six to eight weeks for paper returns.8Internal Revenue Service. Business Tax Account
Signs the Corporation May Not Qualify as an S Corp
Sometimes the paperwork says S corp but the ownership structure quietly disqualifies the corporation. Federal law requires an S corporation to meet every one of these tests at all times:9Office of the Law Revision Counsel. 26 USC 1361 – S Corporation Defined
- No more than 100 shareholders, with family members eligible to be counted as one.
- Shareholders must be individuals, certain estates, or qualifying trusts. Partnerships, LLCs, and other corporations cannot own S corp stock.
- No nonresident alien shareholders. Every individual owner must be a U.S. citizen or resident alien.
- Only one class of stock, meaning identical rights to distributions and liquidation proceeds across all outstanding shares.
The one-class-of-stock rule is the one people misread. Differences in voting rights alone do not create a second class, so voting and nonvoting common shares are fine as long as they carry the same economic rights.10eCFR. 26 CFR 1.1361-1 – S Corporation Defined What breaks the rule is issuing preferred stock or any class that gets paid ahead of another on distributions or liquidation. If a partnership, another corporation, or a nonresident alien appears on the shareholder list, or if the stock ledger shows preferred and common shares with different economic rights, the corporation cannot hold S corp status even if a Form 2553 was once accepted.
If You Discover the Wrong Status Was Filed
Finding out that the wrong return has been going in each year happens more than you’d expect, and the costs are real. If a corporation files Form 1120-S without a valid S election on file, the IRS rejects the return and notifies the corporation that the election is invalid.11Internal Revenue Service. Filing Requirements for Filing Status Change The corporation then has to file corrected Form 1120s for those years, potentially owing corporate tax and interest.
Going the other direction stings too. When a valid S election exists but someone filed Form 1120 by mistake, the late or incorrect filing penalty for an S corp return is $255 per shareholder per month, up to 12 months.3Internal Revenue Service. Instructions for Form 1120-S (2025) Five shareholders and a full year late works out to $15,300 in penalties before interest.
Late Election Relief
If the corporation meant to be an S corp but missed the Form 2553 deadline, Revenue Procedure 2013-30 offers relief. The request generally has to be filed within three years and 75 days of the intended effective date.12Internal Revenue Service. Revenue Procedure 2013-30 File Form 2553 with “FILED PURSUANT TO REV. PROC. 2013-30” written at the top, include a reasonable-cause statement, and get every shareholder who held stock during the gap period to sign a consent and confirm they reported income consistently with S corp treatment. Miss that window and the remaining route is a private letter ruling, which carries a user fee that can run into the thousands.11Internal Revenue Service. Filing Requirements for Filing Status Change
The Form 2553 deadline itself is worth knowing: no more than two months and 15 days after the start of the tax year the election is meant to cover, or at any point during the preceding tax year.13Internal Revenue Service. Publication 509 (2026), Tax Calendars For a calendar-year corporation that’s March 15.
Inadvertent Termination Relief
An existing S election can also blow up by accident: a shareholder transfers stock to an ineligible owner, the company issues a second class of stock without seeing the consequences, or a nonresident alien ends up on the ledger. When the termination wasn’t intentional, the IRS can treat the election as if it never lapsed under Section 1362(f), provided the corporation fixes the problem within a reasonable time after discovering it and agrees to the adjustments the IRS requires.14eCFR. 26 CFR 1.1362-4 – Inadvertent Terminations and Inadvertently Invalid Elections Without relief, the corporation reverts to C corp status on the date of the disqualifying event, and it generally cannot re-elect S corp status for five years.15Office of the Law Revision Counsel. 26 USC 1362 – Election; Revocation; Termination That five-year lockout is why it pays to review the shareholder registry now and then, not only when a question comes up.