The IRS Form 8832 (Entity Classification Election) allows business entities to change their tax classification for U.S. federal tax purposes. Upon creating an entity, certain domestic and foreign entities have a default tax classification. The Form 8832 allows an eligible entity to choose an alternative classification from the default treatment.

For example, John Doe and Jane Doe form a Delaware limited liability company (LLC) where each person owns 50% of the LLC. Under the default rules, a multi-member LLC is a partnership for federal tax purposes. The partnership must file an annual Form 1065 (US Return of Partnership Income). John and Jane can file Form 8832 to elect for the LLC to be taxed as a corporation instead of a partnership. The LLC would now file an annual Form 1120 (US Corporation Income Tax Return) instead of Form 1065.

Key Elements of the Form 8832
  • Domestic and Foreign Eligible Entities. The domestic or foreign entity must be an “eligible” entity for federal tax purposes. If the entity is NOT an eligible entity, it must keep its default tax classification. A domestic eligible entity includes an LLC.
  • Deadline to File. The change request must generally be filed within 75 days of the desired effective date. For example, John Doe and Jane Doe form a Delaware LLC on June 1, 2024. If the LLC wants to be taxed as a corporation beginning on the date of entity formation, the Form 8832 must be filed within 75 days of June 1, 2024, which will be on or before August 15, 2024. If the election is filed after the 75-day window, the entity may use the late election relief procedures under IRS Revenue Procedure 2009-41.
  • Reclassification Under the 60-Month Rule. Once an entity makes an election, it cannot change its classification again within 60 months, unless the entity obtains IRS consent. For example, if John Doe and Jane Doe file the election to change their LLC from a partnership to a corporation effective June 1, 2024, the LLC cannot subsequently file a second Form 8832 to change back to a partnership within 60 months from the initial Form 8832 election. Once 60 months have passed (June 1, 2029), the LLC could file a second Form 8832.
  • Signatures. The election should be signed by each owner of the eligible entity, or it can be signed by one person who is authorized to make the election on behalf of the entity.
Default Classifications for U.S. and Foreign Entities
  • U.S. Single-Member LLC. An LLC with one owner is, by default, a disregarded entity for federal tax purposes.
  • U.S. Multi-Member LLC. An LLC with more than one owner is, by default, a partnership for federal tax purposes.
  • U.S. Corporate Entities. A corporate entity is, by default, a corporation for federal tax purposes, regardless of the number of owners.
  • Foreign Corporate Entities. A foreign corporate entity is, by default, a corporation for federal tax purposes, regardless of the number of owners.
  • Foreign Partnership. A foreign partnership is generally a partnership for federal tax purposes. However, some foreign partnerships in certain countries may be corporations for federal tax purposes. The foreign partnership will be a corporation if all members have limited liability.
  • Foreign LLC. A foreign LLC is generally a partnership for federal tax purposes. However, some foreign LLCs in certain countries may be corporations for federal tax purposes. The foreign LLC will be a corporation if all members have limited liability.
Sample Video Tutorials on Form 8832

Please visit our channel for several tutorials on the Form 8832:

Additional Information

Business owners can find more information on entity classification elections in the Form 8832 Instructions. The IRS Publication 3402 (Taxation of LLCs) provides more guidance on the tax implications of filing entity classification elections for LLCs.