Tax Court Rules an S Corporation Shareholder May Not Unilaterally Revoke an S Corporation’s Tax Election: Today, the Tax Court issued its opinion in Caselli v. Commissioner. At issue before the court was whether an S corporation may revoke the election of deducting certain employment tax expenses and claim section 45B credits instead solely by the request of one of its shareholders acting solely in his capacity as a shareholder, effectively enabling the shareholder to nullify the S corporation’s election unilaterally and retroactively. During the years at issue, the petitioner was one of three shareholders of an S corporation that operated multiple restaurants. S corporation’s restaurants hired “tipped employees,” whose earnings came partially from customer tips, was then required to pay taxes on those tips as part of its Federal Insurance Contribution Act (FICA) tax payments. Under section 45B, an employer working in the food and beverage industry is allowed to claim business tax credits for the portion of the FICA taxes it paid on the employee tips. When S corporation filed its returns for 2006 and 2007, it did not claim any FICA tip credits and instead deducted the payments of FICA tip taxes. The petitioner argued that S corporation should be allowed to change its election to claim the FICA tip credit by filing amended returns solely by the request of the petitioner. The court held that it would not allow the petitioner to change the S corporation’s election unilaterally because the change would affect not only the petitioner’s tax liabilities, but also potentially the other shareholders’ tax liabilities. For these reasons, the court did not allow the petitioner to claim the FICA tip credits on his individual tax return.