Form 8716 (Rev. 9-2017)
Page 2
Also file a copy of Form 8716 with your income tax return for
the first tax year for which the election is made. To enable
electronic filing, you may file an unsigned Form 8716 containing
the same information as on the signed Form 8716 you filed
separately.
Effect of Section 444 Election
Partnerships and S corporations. An electing partnership or
S corporation must file Form 8752, Required Payment or Refund
Under Section 7519, for each year the election is in effect even
if the required payment for the applicable election year is zero.
Form 8752 is used to figure and make the payment required
under section 7519 or to obtain a refund of net prior year
payments. File Form 8752 by May 15 following the calendar
year in which each applicable election year begins.
The section 444 election will end if the partnership or
S corporation willfully fails to comply with the requirements of
section 7519.
Personal service corporations (PSCs). An electing PSC
should not file Form 8752. Instead, it must comply with the
minimum distribution requirements (see next paragraph) of
section 280H for each year the election is in effect. If the PSC
does not meet these requirements, the applicable amounts it
may deduct for payments made to its employee-owners may be
limited.
Use Schedule H (Form 1120), Section 280H Limitations for a
Personal Service Corporation (PSC), to figure the required
minimum distribution and the maximum deductible amount.
Attach Schedule H to the income tax return of the PSC for each
tax year the PSC does not meet the minimum distribution
requirements.
The section 444 election will end if the PSC is penalized for
willfully failing to comply with the requirements of section 280H.
Members of Certain Tiered Structures May
Not Make Election
No election may be made under section 444(a) by an entity that
is part of a tiered structure other than a tiered structure that
consists entirely of partnerships and/or S corporations all of
which have the same tax year. An election previously made will
be terminated if an entity later becomes part of a tiered
structure that is not allowed to make the election. See
Temporary Regulations section 1.444-2T for other details.
Acceptance of Election
After your election is received and accepted by the service
center, the center will stamp it “Accepted” and return a copy to
you. Be sure to keep a copy of the form marked “Accepted” for
your records.
End of Election
The election is made only once. It remains in effect until the
entity changes its accounting period to its required tax year or
some other permitted year or it is penalized for willfully failing to
comply with the requirements of section 280H or 7519. If the
election is terminated, the entity may not make another section
444 election.
Signature
Form 8716 is not a valid election unless it is signed. For
partnerships, a partner or a limited liability company member
must sign and date the election.
For corporations, the election must be signed and dated by
the president, vice president, treasurer, assistant treasurer, chief
accounting officer, or any other corporate officer (such as tax
officer) authorized to sign its tax return.
If a receiver, trustee in bankruptcy, or assignee controls the
entity’s property or business, that person must sign the election.
Specific Instructions
Line 1
Check the applicable box to indicate whether the entity is
classified for federal income tax purposes as a partnership, an
S corporation (or a C corporation electing to be an
S corporation), or a PSC.
A corporation electing to be an S corporation that wants to
make a section 444 election is not required to attach a copy of
Form 8716 to its Form 2553, Election by a Small Business
Corporation. However, the corporation is required to state on
Form 2553 its intention to make a section 444 election (or a
backup section 444 election). If a corporation is making a
backup section 444 election (provided for in Part II, item Q, of
Form 2553), it must type or print the words “Backup Election” at
the top of the Form 8716 it files. See Temporary Regulations
section 1.444-3T for more details.
Line 2
Enter the name and telephone number (including the area code)
of a person that the IRS may call for information needed to
complete the processing of the election.
Line 4
Required tax year. The required tax year for an S corporation
or PSC is a calendar year. Generally, the required tax year for a
partnership is the tax year of a majority of its partners (see
Regulations section 1.706-1(b) for details).
Line 5
The following limitations and special rules apply in determining
the tax year an entity may elect.
New entity adopting a tax year. An entity adopting a tax year
may elect a tax year under section 444 only if the deferral period
of the tax year is not more than 3 months. See Deferral period,
later.
Existing entity retaining a tax year. In certain cases, an entity
may elect to retain its tax year if the deferral period is not more
than 3 months. If the entity does not want to elect to retain its
tax year, it may elect to change its tax year as explained below.
Existing entity changing a tax year. An existing entity may
elect to change its tax year if the deferral period of the elected
tax year is not more than the shorter of 3 months or the deferral
period of the tax year being changed. If the tax year being
changed is the entity’s required tax year, the deferral period for
that year is zero and the entity is not permitted to make a
section 444 election.
Example. ABC, a C corporation that historically used a tax
year ending October 31, elects S status and wants to make a
section 444 election for its tax year beginning November 1.
ABC’s required tax year under section 1378 is a calendar tax
year. In this case, the deferral period of the tax year being
changed is 2 months. Thus, ABC may elect to retain its tax year
beginning November 1 and ending October 31 or elect a tax
year beginning on December 1 (with a deferral period of 1
month). However, it may not elect a tax year beginning October
1 because the 3-month deferral period would be longer than the
2-month deferral period of the tax year being changed. If ABC
elects a tax year beginning on December 1, it must file a short
tax year return beginning November 1 and ending November 30.
