S-Corporation Election Package (Form 2553 + State S-Election) - Alaska

S-CORPORATION ELECTION PACKAGE — ALASKA

OVERVIEW

An S corporation election allows a qualifying corporation (or an eligible entity that elects to be taxed as a corporation) to pass its income, losses, deductions, and credits through to shareholders, generally avoiding federal entity-level income tax (the "double taxation" of a C corporation). The federal election is made by filing IRS Form 2553 under 26 U.S.C. § 1362(a).

Why elect S status:

• Pass-through taxation — generally no entity-level federal income tax (26 U.S.C. § 1363).
• Potential self-employment-tax savings on distributions versus a sole proprietorship or partnership (subject to the reasonable-compensation rules).
• Limited liability is preserved at the entity level.

Key federal limitations: ≤ 100 shareholders; one class of stock; only eligible shareholders; domestic eligible corporation.

Alaska overlay (summary): Alaska recognizes the federal S election (no separate state election); Alaska has no personal income tax, so pass-through income is generally not taxed at the Alaska level; but Alaska imposes a corporate net income tax (AS 43.20), and corporate-level S-corp taxes (built-in gains, excess net passive income) can apply at the Alaska corporate rate. The Alaska return is Form 6000 (Form 6020 for oil & gas).

Corporation Identifying Information

PART 1 — FEDERAL ELIGIBILITY CHECKLIST (26 U.S.C. § 1361)

Confirm every item before filing Form 2553. If any item cannot be checked, the entity is not eligible and the election should not be filed until the defect is cured.

Entity Eligibility

☐ The entity is a domestic corporation (or an eligible domestic entity, e.g., an LLC, that will be treated as a corporation) — § 1361(b)(1).
☐ The entity is not an ineligible corporation (not a bank/thrift using the reserve method of accounting for bad debts, not an insurance company taxed under subchapter L, not a possessions-tax-credit corporation, not a current/former DISC) — § 1361(b)(2).
☐ The entity has only one class of stock (differences in voting rights alone are permitted; differences in distribution/liquidation rights are not) — § 1361(b)(1)(D), Treas. Reg. § 1.1361-1(l).

Shareholder Count

☐ The entity has no more than 100 shareholders — § 1361(b)(1)(A).
☐ Family aggregation applied: members of a family (a common ancestor, lineal descendants up to six generations, and their spouses/former spouses) may be counted as one shareholder — § 1361(c)(1).

Eligible Shareholders Only

☐ All shareholders are eligible: individuals (who are U.S. citizens or resident aliens), estates, certain trusts, and certain tax-exempt organizations (§ 401(a) and § 501(c)(3)) — § 1361(b)(1)(B).
☐ No shareholder is a nonresident alien — § 1361(b)(1)(C).
☐ No shareholder is a partnership or a corporation (other than as permitted, e.g., an S corporation owning a QSub).
☐ Any trust shareholder is a permitted trust: grantor trust, testamentary trust (2-year limit), voting trust, Qualified Subchapter S Trust (QSST) (§ 1361(d)), or Electing Small Business Trust (ESBT) (§ 1361(e)).

PART 2 — FEDERAL FORM 2553 (LINE-BY-LINE)

Part I — Election Information

Part I — Shareholders' Consent Statement (columns J–N)

Every shareholder must consent. (Alaska has no community-property/marital-consent issue for state income tax because Alaska has no personal income tax, but a spouse who is a record or beneficial owner of stock — including under an Alaska community-property trust under AS 34.77 — must still consent for federal purposes.) For each shareholder, complete:

Part II — Selection of Fiscal Tax Year

Complete only if a tax year other than a permitted calendar year is requested. Identify the basis — a natural business year, an ownership tax year, a § 444 election, or a business-purpose request (§ 442 / Rev. Proc. 2006-46).

Part III — Qualified Subchapter S Trust (QSST) Election

Complete only if a QSST will hold stock; the income beneficiary makes the § 1361(d)(2) election here (or by separate statement).

Part IV — Late Corporate Classification / Late S-Election Representations

Complete the representations supporting relief under Rev. Proc. 2013-30 if the election is filed late (see timing rules below).

Timing of the Federal Election (26 U.S.C. § 1362(b))

• General rule: file by the 15th day of the 3rd month of the tax year the election is to take effect (the "2 months and 15 days" rule). For a calendar-year entity electing for 2026, that is on or about March 16, 2026.
• Alternative: file any time during the preceding tax year.
• Newly formed entity: the first tax year begins on the earliest of when it has shareholders, acquires assets, or begins doing business; file within 2 months and 15 days of that date.
• Late filing: if the deadline is missed, relief is available under Rev. Proc. 2013-30 (see Part 4 cross-reference / relief), generally within 3 years and 75 days of the intended effective date.

PART 3 — SHAREHOLDER CONSENT STATEMENT

ALL shareholders must consent to the S election (26 U.S.C. § 1362(a)(2); Treas. Reg. § 1.1362-6). Where stock is held under a community-property arrangement (e.g., an Alaska community-property trust under AS 34.77), the spouse holding the community interest must also consent for federal purposes.

PART 4 — ENTITY INTERPLAY (LLCs AND FORM 8832)

• A corporation files only Form 2553 to elect S status.
• An LLC (or other eligible entity) that wants S status may file Form 2553 alone: a timely Form 2553 is treated as a deemed entity classification election (Form 8832) to be taxed as an association/corporation, effective on the requested S-election date — see Form 2553 Instructions and Treas. Reg. § 301.7701-3(c)(1)(v)(C). A separate Form 8832 is therefore generally not required when Form 2553 is timely.
• File a separate Form 8832 only if the entity wants a corporate classification effective on a different date than the S election, or in other circumstances described in the Form 8832 / Form 2553 Instructions.

PART 5 — ALASKA STATE S-CORP OVERLAY (KEY STATE-SPECIFIC SECTION)

5.1 No Separate Alaska Election — Automatic Recognition; No Personal Income Tax

Alaska adopts the Internal Revenue Code by reference under AS 43.20.021(a), including the subchapter S election provisions (IRC §§ 1361–1363). Therefore Alaska recognizes the federal S election automatically, and there is no separate Alaska state S-election form. Because Alaska has no personal income tax (the individual income tax was repealed in 1980), the S corporation's pass-through income is generally not taxed at the Alaska level to its individual shareholders — Alaska residents pay no state tax on their distributive share, and Alaska does not impose a nonresident-shareholder or composite filing obligation comparable to income-tax states.

5.2 Alaska Corporate Net Income Tax (AS 43.20) — When It Applies to an S Corporation

Alaska imposes a corporate net income tax under AS 43.20.011 at graduated rates (up to 9.4%). Because Alaska conforms to subchapter S, an S corporation generally is not subject to Alaska corporate income tax on its ordinary pass-through income (it is taxed at the shareholder level federally and not at all at the Alaska level). However, corporate-level federal taxes that fall on an S corporation can flow through to Alaska:

• Built-in gains tax (IRC § 1374) and excess net passive income tax (IRC § 1375) are corporate-level taxes imposed on the S corporation at the federal level.
• Under 15 AAC 20.130 (effective 1998), where an adopted IRC provision references the highest IRC § 11 rate, the Alaska taxpayer uses the highest Alaska rate under AS 43.20.011(e) instead. This regulation was adopted to supply the Alaska rate that the Reid Brothers Office of Tax Appeals decision found missing for the 1992 tax year (when the OTA held the built-in gains tax was not incorporated for lack of an Alaska rate). VERIFY with the Alaska DOR the current Alaska treatment of built-in gains and excess net passive income for S corporations and the applicable rate.

☐ Determine whether the entity was ever a C corporation (or acquired carryover-basis C-corp assets) — if so, assess built-in gains exposure during the 5-year recognition period.
☐ Determine whether the entity has C-corp accumulated E&P and passive income > 25% of gross receipts — if so, assess excess net passive income exposure.

5.3 Alaska Return — Form 6000 / 6020

The Alaska S corporation files the Alaska corporation net income tax return on Form 6000 (or Form 6020 for an oil and gas corporation), reporting Alaska apportionment/allocation and computing any corporate-level tax (e.g., on built-in gains). Confirm the filing requirement and due date (Alaska generally allows the federal extension period) with the Alaska Department of Revenue, Tax Division.

☐ Confirm Alaska nexus / doing business in Alaska, and the apportionment/allocation rules.
☐ File Form 6000 (or 6020) and pay any Alaska corporate-level tax due.

5.4 No State-Level PTE / Composite Filing

Because Alaska has no personal income tax, there is no Alaska pass-through-entity (PTE) elective tax and no nonresident-shareholder composite return comparable to those in income-tax states. The S corporation's only Alaska income-tax exposure is the entity-level corporate tax described in Part 5.2.

PART 6 — POST-ELECTION COMPLIANCE

Federal

☐ Reasonable compensation: pay shareholder-employees reasonable W-2 wages for services before taking distributions; the IRS recharacterizes inadequate wages and assesses payroll tax, penalties, and interest. Run payroll, file Forms 941/940, and issue W-2s.
☐ Distributions vs. wages: distributions are generally not subject to FICA, but only after reasonable compensation is paid; track the Accumulated Adjustments Account (AAA) and shareholder basis.
☐ Form 1120-S filed annually; issue Schedule K-1 to each shareholder.
☐ Built-in gains tax (§ 1374): if the entity was formerly a C corporation (or acquired assets with a carryover C-corp basis), a corporate-level tax applies to net recognized built-in gains during the 5-year recognition period (and, per Part 5.2, may flow through to Alaska).
☐ Excess net passive income tax (§ 1375): if the entity has accumulated C-corp earnings and profits and passive investment income exceeds 25% of gross receipts, a corporate-level tax applies (and, under § 1362(d)(3), three consecutive such years terminate the election).
☐ Single class of stock / eligible shareholders maintained: monitor every transfer; an ineligible shareholder or a second class of stock terminates the election.
☐ Retain the IRS acceptance letter (CP261) permanently.

Alaska

☐ File Form 6000 (or 6020) reporting Alaska apportionment and any corporate-level S-corp tax (built-in gains / excess net passive income) — Part 5.2–5.3.
☐ Confirm there is no Alaska individual-income-tax or composite obligation for shareholders (none currently exists) — Part 5.1, 5.4.
☐ Make any required Alaska corporate estimated payments if a corporate-level tax is expected.
☐ Maintain books and records supporting the Alaska apportionment factors and any built-in gains computation.

PART 7 — REVOCATION / TERMINATION (26 U.S.C. § 1362(d))

Voluntary Revocation — § 1362(d)(1)

☐ Shareholders holding more than 50% of the shares (voting and nonvoting) on the day of revocation must consent.
☐ File a revocation statement with the IRS Service Center where Form 2553 was filed (no official form; a letter format with shareholder consents).
☐ Effective date: if filed by the 15th day of the 3rd month of the tax year, effective the first day of that year; otherwise the first day of the next tax year (or a specified prospective date).

Involuntary / Automatic Termination — § 1362(d)(2)–(3)

Automatic termination occurs if:
☐ The entity ceases to qualify (exceeds 100 shareholders, issues a second class of stock, or an ineligible shareholder acquires stock) — § 1362(d)(2).
☐ Passive investment income exceeds 25% of gross receipts for 3 consecutive years while the entity has C-corp accumulated E&P — § 1362(d)(3).

Inadvertent Termination Relief — § 1362(f)

☐ If a termination was inadvertent, request IRS relief under § 1362(f) (often via a private letter ruling) to be treated as continuing as an S corporation.

5-Year Re-Election Bar — § 1362(g)

☐ After a termination or revocation, the entity generally may not re-elect S status for 5 tax years without IRS consent.

Alaska on Termination/Revocation

☐ If a federal revocation/termination occurs, Alaska treatment follows the federal status: the entity is then taxed as a C corporation for Alaska corporate income tax (AS 43.20.011) on its full Alaska net income (filed on Form 6000/6020). VERIFY with the Alaska DOR.

SOURCES AND REFERENCES

• IRS Form 2553 and Instructions (Election by a Small Business Corporation).
• IRS Form 8832 and Instructions (Entity Classification Election); Treas. Reg. § 301.7701-3.
• 26 U.S.C. §§ 1361–1368 (Subchapter S); § 1374 (built-in gains); § 1375 (excess net passive income).
• 26 U.S.C. § 1362 (election, revocation, termination); Treas. Reg. § 1.1362-6 (election procedures).
• Rev. Proc. 2013-30 (late S-election relief).
• IRS Form 1120-S and Schedule K-1.
• Alaska Net Income Tax Act, AS 43.20 — AS 43.20.011 (corporate net income tax rates); AS 43.20.021 (IRC adopted by reference, including subchapter S).
• 15 AAC 20.130 (Alaska rate where an adopted IRC provision references the highest IRC § 11 rate).
• Alaska Form 6000 / 6020 and Instructions (Alaska Corporation Net Income Tax Return).
• In re Reid Brothers Logging & Construction, Inc., Alaska Office of Tax Appeals (Sept. 10, 1998) — incorporation of subchapter S; pre-1998 built-in gains treatment.
• Alaska Department of Revenue, Tax Division — tax.alaska.gov.