What This Notice Means

The IRS accepted your subsidiary's Form 8869, Qualified Subchapter S Subsidiary Election. This notice goes to the parent S corporation. It is a confirmation. Nothing is wrong.

A qualified subchapter S subsidiary, often called a QSub, is a corporation wholly owned by an S corporation that has elected this treatment. Its activity is reported with the parent.

What to Do

  • Keep this notice in your permanent records.
  • Give your subsidiary corporation a copy.
  • If your address has changed, notify the IRS with Form 8822-B, Change of Address or Responsible Party - Business.

How to Report the Subsidiary

Subsidiary information is reported on Form 851, Affiliations Schedule, and other necessary schedules filed with the parent's Form 1120-S, U.S. Income Tax Return for an S Corporation.

Make sure your preparer knows the election was accepted. The way the subsidiary's income and expenses are reported depends on it.

Why Keep This Notice

Elections get questioned years later: in an audit, a sale of the business, a loan application, or a change of accountants. This notice is your proof the IRS accepted the QSub election. Store it with your corporate records, not in a stack of mail.

The subsidiary receives its own version of this confirmation, CP279A. The two notices confirm the same election.

If Something Looks Wrong

Check the corporation names, EINs, and details on the notice against the Form 8869 you filed. If anything doesn't match, call the number on your notice.

If you received a CP279 notice and have questions about your corporate structure, call us at (813) 229-7100.