LLC Elected as C-Corp: Form 1120 Filing Requirements and Special Rules

How does an LLC elect to be taxed as a C corporation?

An LLC elects C-Corp tax status by filing Form 8832 (Entity Classification Election) with the IRS. This is a deliberate step — it does not happen automatically. The election can be made effective on the date filed or retroactively up to 75 days.

Once the election is in effect, the IRS treats the LLC exactly like a traditional C corporation for all federal tax purposes.

What forms does an LLC taxed as a C-Corp need to file?

The LLC files Form 1120 (U.S. Corporation Income Tax Return) annually — the same form as any traditional corporation. For the first filing after the election, a copy of Form 8832 must be attached to the return.

Additionally, the LLC must file Forms 1099 for payments to contractors, employment tax returns (Forms 940/941) if it has employees, and any applicable state returns.

Is there any difference between an LLC taxed as a C-Corp and a regular corporation?

From a federal tax perspective, there is no difference. Both file Form 1120 and pay the same 21% corporate tax rate.

The differences are at the state level and in corporate governance. Some states impose additional LLC fees or franchise taxes on top of corporate income tax — for example, California charges both an $800 minimum franchise tax and a separate LLC fee based on gross receipts. LLCs also have membership interests instead of stock and typically have fewer corporate formalities.

What is the 60-month rule?

Once an LLC elects C-Corp status via Form 8832, it generally cannot change its tax classification again for 60 months (5 years) from the effective date of the election. This prevents entities from switching back and forth between classifications for tax advantage.

There are limited exceptions — for example, if more than 50% of the ownership interests change hands.

Do LLC members need to receive W-2 wages?

Yes. When an LLC is taxed as a C corporation, members who work in the business must be treated as employees and receive W-2 wages. This is different from a disregarded entity, where the owner simply takes draws. The LLC must withhold income tax, Social Security, and Medicare from these wages and file employment tax returns.

Can a foreign owner's LLC elect C-Corp status?

Yes. A foreign-owned LLC can elect C-Corp status by filing Form 8832. However, this creates significant additional obligations: filing the full Form 1120, paying the 21% corporate tax, and potentially triggering double taxation (corporate tax plus withholding tax on distributions to the foreign owner).

Foreign owners should also be aware that they cannot elect S-Corp status — non-resident aliens are not eligible to be S corporation shareholders.