Your tax client, Yankee LLC (the Company) was organized as a limited liability company under the laws

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Question:

Your tax client, Yankee LLC (the Company) was organized as a limited liability company under the laws of Virginia, effective January 1, 2020. The Company immediately elected to be taxed as an S corporation effective that same date by timely filing IRS form 2553. Subsequent to the filing of form 2553, the IRS issued its approval. This approval letter has been retained as a part of the Company's corporate records. The Company is owned by two individuals and has enjoyed tremendous success.

Ownership of the Company is in the process of negotiating a sale of their membership interest (which represents the entire Company) to an unrelated party. The buyer in the process of completing its financial and other due diligence and the sale is expected to close in the next 45 days. Ownership, its accounting firm, and its legal counsel have been successful in responding to all request for information and inquiries and are anxiously awaiting the end of this stressful process.

On a Friday afternoon right before what is expected to be a long weekend, you get a text message from one of the attorneys for the buyer suggesting that she has some concern that the

Company's S corporation election may have never been valid. After several lengthy conference calls with the buyer's attorneys, your attorneys, and your CPA firm, everyone agrees that the original organizational documents for the Yankee LLC had inadvertently created a second class of stock, which is prohibited under the S corporation requirements. This is heartbreaking news and would appear to be a deal breaker for sale the Company.

You recently attended a seminar on Rev Proc. 2022-19 and after a quick conversation with the Company's attorney, both of you are hopeful this can be fixed without a time consuming and expensive request for a Private Letter ruling.

Required

By reference to Rev Proc. 2022-19, describe in summary format the actions that you believe will be necessary to address this issue. Be prepared to discuss your plan with all interested parties.