Check-the-box election
Form 8832 changes the tax classification and nothing else — and locks it for 60 months.
The other route keeps the LLC as an LLC under state law and changes only its tax classification: a check-the-box election on Form 8832 to be taxed as a corporation. The regulations spell out what that is deemed to be: the partnership contributes everything to a corporation for stock and distributes the stock to its partners.
The election can take effect up to 75 days before it is filed or up to 12 months after. Once an entity has changed its classification by election, it generally can't change it again for 60 months.
Statutory conversion
- Good at
- It becomes a real corporation, with stock and a board.
- Preferred stock and option plans under the DGCL.
- Watch for
A state filing and new governing documents.
- Best for
- A startup about to raise money, whose investors want a Delaware corporation with stock.
Check-the-box (Form 8832)
- Good at
- No state filing.
- Can be dated up to 75 days back.
- Watch for
- It still has units and an operating agreement, not stock — investors rarely accept that.
- No second change for 60 months.
- Best for
- An LLC that wants corporate tax treatment and nothing else changed.
Where this lesson's rules come from
The sources behind this lesson's requirements, by kind. Anything marked as a convention is ours, not the rule-maker's.
- Federal regulation
- Treas. Reg. §301.7701-3(g)(1)(i) (opens in a new tab)An elective change from partnership to corporation, and what it is deemed to beFree to read
- Treas. Reg. §301.7701-3(c)(1)(iv) (opens in a new tab)After an elected change of classification, no second election for sixty monthsFree to read
- Official form
- Form 8832 (Rev. December 2013) (opens in a new tab)Form 8832, Entity Classification Election (PDF)PDF · Free to read
The words this page teaches
Each links to its glossary definition, which also names the authority behind it and the components that render it.
- Check-the-box electionThe election on Form 8832 by which an eligible entity — an LLC or a partnership, never a corporation formed under a state's corporation statute — chooses its federal tax classification. Effective no more than 75 days before or 12 months after it is filed, and after a change, no second change for 60 months
- Limited liability companyA state-law entity whose owners (members) are shielded from its debts like shareholders. Federal tax has no LLC category: by default it is a partnership with two or more members and disregarded with one, and it is a C or S corporation only if it elects