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Q&A converting C to S Corp / Comment on Free Advice to public /Schedule Free meeting at ISC / Round Table Discussions at ISC
February 25, 2020
Q&A converting C to S Corp
    In regard to the "c" corp comment question ----if a c corp changes to an S corp by March 15 of 2020 and the business is sold in 2020 or beyond, did the comment indicate the taxes would revert back to a C corp and would it be retroactive?
To Hank
    I am not certain what you are asking, but here are the rules:
    IRS Code Section 1374 imposes what are called “Built in Gains” (‘BIG’) Taxes on C Corporations that elect Subchapter S Status. This is to prevent a C Corporation from waiting until an asset sale is eminent and then Electing S Status.      The rule is that the corporation has to wait for five years. There is no allocation or proration, i.e. if the Shareholders sell on the 364th day of the fifth year, the BIG taxes are still in effect 100%. 
    The IRS allows most C Corporations to elect status for a particular year up until the 15th day of the third month (March 15th for a calendar year corporation). You can’t get around this by electing a fiscal year as an S Corporation must have the same tax year as a majority of its shareholders and substantially all individuals have been required to have a calendar year since the early 1970’s.
    A new corporation can late elect S Status up until the date that the first return is filed, but it must be a new corporation that has never filed a return as a C Corporation. 
    If your goal is to sell assets, like RMR, out of an S Corporation so as to avoid the double taxation, you should elect S Status by March 15th of 2020. This would start your clock running and you could sell as early as January 1, 2026. Before you rush out and do this, consult a competent tax advisor or call us to review any downsides to the election.
    I get calls from company owners who have spoken with “tax advisors” who have told them that they can avoid double taxation by treating the sale as personal goodwill, converting to an LLC Partnership, etc… Don’t do it. The IRS won’t agree and the consequences are huge. 
    If you have any other questions or would like to chart a course for an S Election give me a call.
Mitch Reitman
Reitman Consulting Group
Fort Worth, TX
    Mitch Reitman, listed on The Alarm Exchange, is an excellent source of information for taxes affecting the alarm industry. Engage him for tax and accounting work.
Comment on Free Advice to public from article on February 19, 2020
    I am amused reading your response to “Who can review a subscribers video” where you stated, “ I received the above question from someone who must have mistaken me for “free legal services to the public”. Reminds me of a story I heard years ago:
    A Doctor and a Lawyer are mingling at a social gathering when a person comes up to the Doctor and shows a rash on his arm and asks for his medical opinion. The Doctor responds and when the person leaves he says to the Lawyer, “That really bugs me when someone comes up simply seeking free medical advice!” The Lawyer responds, “Yes, Doc., I know exactly what you mean. People used to do that to me all the time until I started sending them a bill for SERVICES RENDERED!” The Doctor replied, “Man, THAT’S GREAT advice. I’m gonna start doing that……” 3 days later the Doctor received a bill from the Lawyer for SERVICES RENDERED!
    Appreciate your emails, Sir. Keep ‘em coming.
Glenn Hailey
Semi- Retired
Alarm Alert Center, Inc. (Soon to be 43 years)
     I spend good part of my day giving free advice to the alarm industry. Can't open that up to the public, though that would be a broader base for the Concierge Program. And talking about free advice, there may be a few stops left for the free private meetings while at ISC in Las Vegas. Call Concierge Coordinator Stacy Spector, Esq., 516 747 6700 x 304 or email for appointment. Free advice limited to those in the alarm industry !!!!

Schedule Free Private meeting while at ISC with Ken Kirschenbaum - still a few open times:
            I am scheduling free meetings at ISC now for March 17, 18 and 19, 2020. The meetings are free and scheduled in half hour increments.  Any issues can be discussed or just stop by to chat.  To reserve a time please contact Stacy Spector,Esq at 516 747 6700 x 304 or

Round Table Discussions while at ISC, at Palazzo Hotel.  Free to participate.  Space very limited so book now.  Call Stacy Spector,Esq at 516 747 6700 x 304 to reserve your seat.  [other topics may be announced]
Round Table:  March 18, 2020 at 11 AM.  Join Morgan Hertel, VP of Technology and Innovation, Rapid Response Monitoring and Ken Kirschenbaum for a round table discussion on current state of monitoring including technology and well as outside influencers like minimum wages and privacy laws. 
Round Table: March 18, 2020 at 1 PM.  Join Mitch Reitman and Ken Kirschenbaum for a round table discussion on Taxes and Corporate issues for alarm companies relevant when selling or buying accounts. Sold Out
Round Table:  March 18, 2020 at 2 PM.  Join Ron Davis and Ken Kirschenbaum for a round table discussion on Selling or buying alarm accounts and RMR issues.  Sold Out
Round Table: March 19, 2020 9:15 AM  Join Troy Iverson, VP of Sales, Brian Davis, CFO of AvantGuard Monitoring Centers and Ken Kirschenbaum for a round table discussion on the Current state of the Financial/Capital Market Stability in the Security Industry and necessary agreements needed for security companies. (Titian 2202 Meeting Room just off the show floor)
Round Table: March 19, 2020 at 1 PM.  Join Sharon Elder, VP Sales, USA Central Station and Ken Kirschenbaum for a round table discussion on the value of quality video contracts and services  Sold Out
Round Table:  March 19, 2020 at 3 PM.  Join Bart Didden, Executive Claims Administrator, Security America and Ken Kirschenbaum for a round table discussion on Errors and Omissions Insurance Claims and Risk Management

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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301