Are We an “S” or a “C” Corporation?

The Association’s investment brokerage firm recently asked whether we were an “S” or “C” corporation. What are we and why is this information being requested this year?

Our bank wants to know if we are “C” Corporation. They also want to know if we are a 501-C corporation. What is that…and are we?

Answer- Associations are “C” corporations.

Beginning January 1, 2012, investment accounts of individuals and S Corporations must report cost basis to the Internal Revenue Service on the sale or disposition of certain securities. This will be shown on the year-end form 1099-B that is issued by the brokerage firm.

C Corporations will be exempt from tax reporting by broker dealers. However, C Corporations must certify that they are C Corporations rather than S Corporations no later than January 1, 2012. This is generally requested by the brokerage firm in the form of completion of IRS Form W-9.

The vast majority of associations (99%+) are not 501(c) corporations. For the bank’s purposes, the Association needs to let them know that they are a regular C corporation. An Association will know if they are a 501(c) corporation as they will file form 990 rather than 1120 or 1120-H.