On December 1, 2021, the Tax Court issued a Memorandum Opinion in the case of Chan v. Commissioner (T.C. Memo. 2021-136). The primary issue presented in Chan was whether the entity in question (which filed a Form 2553, Election by a Small Business Corporation, by which it elected to be treated as an S corporation) was an S corporation or a C corporation. Background to Chan v. Commissioner The petitioners operated a restaurant in California by the name of Younique Café Inc. ("YCI"). The restaurant was incorporated in 2010. The petitioner-husband filed articles of incorporation for YCI in August 2010 and subsequently decided to convert it to an S corporation. In March 2011, he filed on YCI’s behalf a Form 2553, electing that the restaurant be treated as an S corporation for Federal income tax purposes. He signed the form as the president of YCI and requested that the conversion…