What Is the Due Date for a QSST Election? Filing and Late Relief

The due date for a QSST election is two months and 15 days after the triggering event — usually the day the S corporation stock is transferred into the trust, or the day the corporation’s S election takes effect if the trust already held the stock as a C corporation shareholder.¹ Miss that window and the trust can lose its status as a permitted S corporation shareholder, which in turn can terminate the corporation’s S election.² The IRS does offer a simplified late-election procedure for filers who miss the deadline but otherwise qualify.³

When the Clock Starts

The two-month and 15-day window runs from a specific triggering date, and which date applies depends on how the trust came to hold the stock.¹

If S corporation stock is transferred to a trust that already exists, the period begins on the day of that transfer. If the trust already holds stock in a C corporation that is converting to S status, the period begins when the corporation’s S election becomes effective. When the corporation files for S status that will not start until the following year, the trust’s election is measured from the date the corporation’s filing was made with the IRS.¹

Two Worked Examples

Stock moved into the trust on May 1. The QSST election is due by July 16.¹

Corporation applies for S status on February 1, retroactive to January 1. The trust has until March 16 to file its QSST election.¹

Who Files, and How

The current income beneficiary makes the election. If the beneficiary is a minor or otherwise unable to act, a legal representative files on their behalf. The signed statement goes to the same IRS service center where the S corporation files its returns.¹

The statement must identify the beneficiary, the trust, and the S corporation, including names, addresses, and taxpayer identification numbers. It must state that the filing is an election under the relevant Code section, give the date the stock was transferred, give the date the election should take effect, and include the beneficiary’s representations that the trust meets the QSST requirements.¹

When a trust already holds the stock at the time the corporation first elects S status on Form 2553, the beneficiary can often make the QSST election within a designated part of that same form. If the trust acquires the stock later, the statement is filed separately.⁴

If You Miss the Deadline

Revenue Procedure 2013-30 gives a simplified path for filers who blew the two-month and 15-day deadline but otherwise qualified. It avoids the cost and complexity of a private letter ruling.³

To use it, the trust and the corporation must have consistently reported their income as though the QSST election had been in place on time. The lapse has to be a paperwork failure, not a failure to follow the underlying rules.³

Relief under this procedure is generally available for up to three years and 75 days after the date the election was supposed to be effective. The beneficiary files the election statement and meets the reporting requirements set out in the revenue procedure. Once that outer window closes, the simplified route is gone, and the remaining option is a private letter ruling with higher user fees and more involved requirements.³

1
Cornell Law School. 26 C.F.R. § 1.1361-1 – Section: (j) Qualified subchapter S trust
2
IRS. Instructions for Form 1120-S – Section: Termination of Election
3
IRS. Late Election Relief – Section: Late election relief
4
IRS. Instructions for Form 2553 – Section: Part III