Revisiting 2% ownership for an s-corp for 5500-EZ filing

[Jakyasar]

Hi

For an s-corp that is owned 50/50 by 2 unrelated partners (no other employees), trying to determine if 5500-EZ is ok to file - I think it is but wanted to double check. What say you?

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From 5500-EZ instructions

Who can file 5500-EZ

2. Covers only one or more partners (or partners and their spouses) in a business partnership (treating 2% shareholder of an S corporation, as defined in IRC §1372(b), as a partner); and

3. Does not provide benefits for anyone except you (or you and your spouse) or one or more partners (or partners and their spouses).

From IRC §1372 (a) &(b)

(a) General rule

For purposes of applying the provisions of this subtitle which relate to employee fringe benefits—

(1) the S corporation shall be treated as a partnership, and

(2) any 2-percent shareholder of the S corporation shall be treated as a partner of such partnership.

(b) 2-percent shareholder defined

For purposes of this section, the term "2-percent shareholder" means any person who owns (or is considered as owning within the meaning of section 318) on any day during the taxable year of the S corporation more than 2 percent of the outstanding stock of such corporation or stock possessing more than 2 percent of the total combined voting power of all stock of such corporation.

 

[RatherBeGolfing]

I'd go a step further than "EZ is ok to file" and say that you are required to file an EZ.