How do I correct EF Message 0535 or 0702 in an 1120S return?
EF Message 0535 -
S ELECTION YEAR: The "S election effective date" (shown on Form 1120S, page 1, Item A), occurs after the start of the tax year. (The program uses a calendar year by default.) Short-year dates are needed to indicate the correct tax year on the top of the Form 1120S.
To indicate short year dates:
1. Go to screen 1.
2. In the "Fiscal year begins" field, enter the S election date.
3. In the "Fiscal year ends" field, enter the calendar year end or appropriate fiscal year end (if not electing a calendar year).
EF Message 0535 occurs because the start of the tax year precedes the S election effective date (Item A on screen 1).
- If the S election effective date is wrong, correct it so that it equals or precedes the start of the tax year; or
- if you intend a short-year return, modify the Fiscal year begins field on screen 1 so that it falls after the S election effective date.
EF Message 0702 -
INVALID ELECTION DATE: The effective date of election as an S corporation is prior to the date of incorporation. Return to screen 1 and check data entry for this information.
EF Message 0702 occurs because the Date incorporated (Item E) is after the S election effective date. Change whichever date is incorrect, so that the date of incorporation is equal to or precedes the S election effective date.