Client letter

Dear Mr. Alex:

I appreciate the opportunity to advise you regarding this tax matter. To ensure a complete understanding between us, I am stating the pertinent information about the advice that I will be rendering and the facts you provided to me.

My understandings of the facts as you described them to me are as follows: On February 1, 2015, one of the shareholders in Alpine Corporation, Albert died. And he appointed Ellen as executor of his estate on May 1, 2015. You company, Alpine Corporation, is a qualified small business corporation eligible to elect S corporation status. On March 10, 2015, Alpine filed Form 2553, the election form to be an S corporation. All of the shareholders signed. And Ellen was on behalf of Albert.

In my opinion, Alpine corporation is valid for S corporation electionin 2015.

First, based on the facts you have presented, all of the shareholders in Alpine gave consent to the election and signed on March 10, 2015. [IRC §1362 (a)(2)] Hence, the election to be an S corporation is valid.

Second, the election was made in March 10, 2015, which was before 15th day of the third month of 2015. It makes the S corporation election was valid for 2015. [IRC §1362 (b)]

Third, the executor of the shareholder’s estate may, in his fiduciary capacity, consent to the election. Ellen acts in a fiduciary capacity on behalf of both Albert and Albert’s estate. He has the power, right, duty and privilege to consent to Alpine’s S corporat ion election on behalf of both Albert and Albert’s estate. (IRC § 6903) Consistent with the power, the executor Ellen, even though was appointed on May 1, 2015, which was after the election date March 10, 2015, he still can consent to the election on behalf of Albert and Albert’s estate. (See Rev. Rul. 92-82, 1992-2 C.B. 238).

In conclusion, the executor,Ellen, can on behalf of the deceased shareholder,Albert to consent to Alpine’s S corporation election, even though the appointed date is after the electio n date. And Alpine corporation is eligible to be an S corporation for 2015.

My conclusions are based on the facts above and the tax law, as it existed on July 15, 2015.

Please let me know if you wish to discuss any of these issues further. I’ve certainly enjoyed working with you on this project and look forward to assisting you in the future when you need tax advice.

Best Regards,

Wen (Joy) Zhang

Staff Accountant