SECTION 5. EXAMPLES

.01 S corporation return filed and no notification from the Service . A, B, and C formed X corporation on January 1, 1996. X intended to file an S corporation election; however, X did not file a timely Form 2553 (Election by a Small Business Corporation). On March 13, 1997, X files a Form 1120S (S corporation income tax return) for the 1996 taxable year, and A, B, and C file their individual tax returns as if X were an S corporation. In November 1997, X realizes that an S corporation election was not timely filed. Neither X nor its shareholders received any notification from the Service of any problem regarding the S corporation status of X . In this case, the shareholders and X meet the requirements of section 4.01 of this revenue procedure. Consequently, X will be granted automatic late S corporation election relief if A, B, C, and X file a request for relief in accordance with the procedures described in this revenue procedure.

.02 C corporation return for first year . A formed X corporation on January 1, 1990. X intended to file an S corporation election effective as of January 1, 1995; h o w e v e r, X did not file a Form 2553 (Election by a Small Business Corporation) until May 5, 1995. On June 15, 1995, X received a letter from the Service notifying X that its S corporation election was denied for the 1995 taxable year because the S corporation election was not timely filed, and that the election would be treated as effective for the 1996 taxable year. X filed a Form 1120 (C corporation income tax return) for the 1995 taxable year and A filed the individual tax return for 1995 as if X were a C corporation. For the 1996 taxable year, X filed a Form 1120S (S corporation income tax return) and A filed the individual tax return as if X were an S corporation. The period of limitations on assessment under § 6501(a) has not lapsed for either the 1995 or the 1996 taxable years for either X or for A . In this case, A and X meet the requirements of section 4.02 of this revenue procedure. Consequently, X will be granted automatic late S corporation election relief if X and A file a request for relief in accordance with the procedures described in this revenue procedure.