Basics on Form 8832
The IRS Form 8832 (Entity Classification Election) allows business entities to change their tax classification for U.S. federal tax purposes.
This video tutorial addresses the rules for what types of domestic and foreign eligible entities can file the entity classification election. In general, a trust is a legal arrangement for the preservation of capital.
Is a Trust a Domestic or Foreign Eligible Entity?
Because a trust is not a type of legal entity, it will generally not be an eligible entity that can file the election.
Under Treas. Reg. Sec. 301.7701-2(a), a business entity is an entity recognized for federal tax purposes that is not properly classified as a trust under Treas. Reg. Sec. 301.7701-4. Given the language found in the regulations, it is clear that a trust arrangement cannot use the Form 8832 entity classification election to change its default tax classification.
Most trust arrangements are characterized as either a grantor or nongrantor trust for federal tax purposes. There are other types of charitable trust arrangements as well.
What Type of Entities Can File Form 8832?
Form 8832 is often filed by a domestic disregarded entity to be treated as a corporation, or its filed by a foreign corporation or foreign partnership to change its default tax classification.
For additional guidance and tutorials on Form 8832, please see our other pages below:
- What is a Per Se Corporation
- Late Filed Form 8832 for Disregarded Entity to Corporation
- Revoking the S Corp Election
Additional Information on the IRS Website
Business owners can find more information on entity classification elections in the Form 8832 Instructions.