Two people advise you. Neither has read the other's document.

Q: Can an LLC elect to be taxed as an S corporation?

Yes, and in one step rather than two. A domestic LLC eligible to be treated as a corporation may file Form 2553 and be deemed to have elected association status along with it under Reg. section 301.7701-3(c)(1)(v)(C), so no separate Form 8832 is required. Eligibility is the part that catches people: the entity must meet every requirement of a small business corporation under section 1361, including not more than one class of stock. Form 2553 does not ask for the operating agreement, and the operating agreement is what that requirement is measured against.

Q: Does a preferred return automatically end an S election?

No. It puts the question on the table. Section 1361(b)(1)(D) allows one class of stock, and Reg. section 1.1361-1(l)(1) treats shares as one class only where they confer identical rights to distribution and liquidation proceeds. A priority return is a right one member holds and the others do not, so the analysis has to be run on the actual words of the agreement. Whether it is fatal depends on the specific facts.

Q: What does the $200 actually get me?

Thirty minutes with the attorney by video, not with an intake coordinator writing your answers down for somebody else to read later. It is paid by PayPal before the call. If thirty minutes is obviously not going to cover what you have described, she will say so before you pay rather than after.

Q: Our members have different voting rights. Is that a second class of stock?

No. Section 1361(c)(4) expressly permits differences in voting rights. It is the item owners ask about most often and it is the one item on the list that is safe on its face.

Q: The 2025 tax act changed things. Does my structure still work?

The act signed in July 2025, P.L. 119-21, made the deduction for qualified business income under section 199A permanent and restored full first-year expensing under section 168(k), among a great deal else. No 2026 dollar figures are printed on this page: thresholds and phase-in ranges move, and a number published in the wrong year is worse than no number, so they are quoted on the call against the current text. What has not changed is that the operating agreement drafted under the old rules is still the governing provision.

Q: I am not in Texas. Can you still help me?

Olinda Woodruff is admitted in Texas. A large part of what a business owner needs is federal, and the Internal Revenue Code does not change at a state line. Questions that turn on your entity's home-state statute or your own state's tax may need counsel licensed where you are, and she will say so rather than guess. Every engagement runs by video, telephone and email.

Q: Do you handle divorce, family law or litigation?

No divorce. No family law. No litigation of any kind. This is on the website rather than discovered on the phone after a consultation has been paid for.

Your lawyer wrote the operating agreement. Your accountant filed the election, ten months later. Both did the job they were hired to do, and nobody read the two documents side by side until the year they had to be defended.

Outside general counsel is one person standing in that gap: someone you can call with a twenty-minute question, who has already read your file. You are never the one carrying the message.

Book a consultation

$200 for thirty minutes, by video. No form to fill in — the page drafts the message for you. Or call 281-797-8389.

What she charges

Published rates

Initial consultation	30 minutes	$200
Everything after it	per hour	$395
Operating agreement	flat fee	$1,500–$10,000
Monthly retainer	—	not offered
Payment	in advance	PayPal

These are the published rates, not a quote. What an engagement costs depends on the specific facts, which is why a flat fee is quoted before work that has a defined shape.

The only thing you decide today is the first $200. Nothing else is due in advance, and there is nothing to sign to find out. If thirty minutes obviously will not cover what you describe, she says so before you pay rather than after.

Contents nine parts · book from any of them

IWhat the $200 buys, minute by minutewho moves, and when

IIHow an operating agreement can end an S corporation election1,030 days, drawn to scale

IIISix provisions that decide whether you have one class of stock26 C.F.R. §1.1361-1(l)(1)

IVWhat a year of asking costsno email, no form

VWork this office refusessaid here, not on the phone

VIWho answers the phonetwo public registries

VIIQuestions owners ask firstten answers

VIIIHow to startMon–Fri 9:00am–5:00pm

IXTable of authoritiesstatutes · regulations · rulings

Two more sheets

Part one — the thirty minutes $200 · by video · the clock, not to scale

What the $200 buys, minute by minute

People put the call off because they cannot picture it, and a thing you cannot picture always loses to whatever is on fire today. So here is the half hour in four beats, in the same channel the next section rules the days into — carrying the clock instead of the calendar, and naming, at each mark, which side of the call is doing the work.

at0:00

01You talkfive minutes

What is already signed.

The one question that changes every answer after it. Entity type, when it was formed, and whether anybody has signed anything with a number in it. If the answer is that it closes Friday, the rest of the call is a different call.

at0:05

02She reads it backfifteen minutes

The decision, in your own words.

One decision, not a briefing on the company. Both halves of it — the document and the election — land in the same head, so no part of this half hour is spent carrying a message between two advisers who have not read each other's file.

at0:20

03You decideseven minutes

What she would do about it, and what that costs.

A flat fee where the work has a defined shape, quoted before it starts. An estimate at $395 an hour where it does not. The aim is that you leave with a number rather than a proposal to read later.

at0:27 ends0:30

04Both, or neitherthree minutes

Whether anything is worth continuing.

Sometimes nothing is. Sometimes the answer is that your question turns on your own state's statute and you need counsel licensed where you are. That is a real outcome of this call, and it gets said out loud rather than billed around.

An order, not a script — a half hour is a half hour and yours will run how it runs. If what you describe obviously will not fit inside one, she will say so before you pay rather than after, and what any of it concludes depends on the specific facts. The channel down the left of this docket is not drawn to scale, and no gap in it is a claim. The one in the next section is, and it says out loud where its scale ends.

Part two — the chain, in the order it happens 26 U.S.C. §1361 · §1362 · §704(b)

How an operating agreement can end an S corporation election

Seven steps, two desks, and a column drawn to scale. Every step is correct on its own terms. Nobody is negligent, nobody is cutting corners, and each professional is doing exactly the job they were engaged to do. The empty stretches in the column between the two desks are drawn at a fixed number of pixels per day, so the silence is a quantity you can see rather than a claim you have to accept. It is a specimen interval, not anybody's file.

Day0

01Drafting deskHolds

You form the LLC.

Two or more members, nothing elected, and the entity is a partnership for federal tax purposes by default. Nothing has gone wrong. Nothing has been decided either.
26 C.F.R. §301.7701-3(b)(1)(i)

Election desk Nothing on file. No return is due for eleven months.
Day116

02Drafting deskHolds

An investor comes in, and the money has terms.

Capital back first, a return on it while it is outstanding, then everybody splits. This is what the negotiation was about, and it is the only part of the deal anyone at the table will still remember in three years.
The term sheet · not a tax document

Election desk Not consulted. This is a business negotiation.
Signed174

03Drafting deskHolds

Counsel writes the deal down, correctly.

A distribution waterfall in Article IV, allocation provisions in Article VII that follow it, and a capital account mechanic behind both. This is competent partnership drafting. The words “Subchapter S” appear nowhere in the engagement letter, because nobody put them there.

Here is the article. Nothing in it is unusual, unfair or badly drafted — it says what the investor and the founder actually agreed. Two phrases in it are the entire problem, and neither one is the words “Class B.”

Specimen — Article IV, §4.2 not from any client file

4.2  Distributions. Distributable Cash shall be distributed to the Members in the following order of priority:

(a)  first, to the Class B Member until such Member has received a cumulative return of eight percent (8%) per annum on its Unreturned Capital Contributions;

(b)  second, to the Class B Member until its Unreturned Capital Contributions have been reduced to zero; and

(c)  thereafter, to the Members pro rata in accordance with their Percentage Interests.

Article IV · Article VII · 26 U.S.C. §704(b)

Election desk Not consulted. The event is invisible from this desk.
Filed471

Drafting desk File closed. The binder is on a shelf.

04Election deskHolds

Somebody elects S.

Usually the accountant, usually in the first quarter, usually to stop paying self-employment tax on the whole distributive share. An LLC gets there by a deemed association election riding along with the Form 2553: two signatures, one page, no attachments.

Nothing on that form asks for the operating agreement, and the operating agreement is not in this file.
26 U.S.C. §1362(a) · 26 C.F.R. §301.7701-3(c)(1)(v)(C)
1,030 days unread
05Day 1,204 · both desks, at lastBreaks here

The two documents meet for the first time, and both are already signed.

A small business corporation may not have more than one class of stock. Shares are a single class only where they confer identical rights to distribution and liquidation proceeds, and the regulation answers that question from the governing provisions — which it defines to include binding agreements relating to those proceeds.

So the two struck phrases on the drafting desk at day 174 are read, for the first time, by the election desk — a thousand days after the ink dried. A right to distribution proceeds that the other members do not hold was written into Article IV on purpose, because that is what the deal was. Article IV was never the private commercial arrangement the people who negotiated it believed it to be. It has been a governing provision since the day it was executed.
26 U.S.C. §1361(b)(1)(D) · 26 C.F.R. §1.1361-1(l)(1), (l)(2)(i)

And the honest other half
Differences in voting rights are expressly permitted and create nothing. That is the item owners ask about most, and it is the one item on the list that is safe on its face. A great deal turns on drafting that is deliberate rather than accidental, which is exactly why this is a question to ask before signature and not after.

26 U.S.C. §1361(c)(4)
Back to471

Drafting desk Not told. The engagement ended at closing.

06Election deskWhat it costs

An invalid election is invalid from day one, not from the day it is found.

Day 471, not day 1,204. Those were C corporation years the whole time: the distributions were dividends, the returns were wrong, and the payroll-tax saving the election was made for never existed. This is the only mark in the column that points backwards.

Relief is real. There is statutory relief where an invalid election or a termination was inadvertent, and the Service has published procedures letting certain governing-provision defects be corrected without a ruling request. Where those do not reach, the route is a private letter ruling with a user fee of [[PLR USER FEE — verify against the current annual revenue procedure]]. None of it is quick and none of it is cheap, and whether any of it is available depends on the specific facts.
26 U.S.C. §1362(f) · Rev. Proc. 2022-19
EveryMarch

07Drafting deskBinds anyway

And if no election is ever made, Article VII still writes the K-1.

Allocations follow the partnership agreement unless they lack substantial economic effect — in which case they are redetermined according to the members' interests in the partnership, by somebody who was not in the room. Economic effect has a three-part test: capital accounts maintained under the regulation, liquidation in accordance with positive capital account balances, and either a deficit restoration obligation or a qualified income offset.

Whatever the members meant, the K-1 says what Article VII says. Every March, for as long as the company exists.
26 U.S.C. §704(a), (b) · §761(c) · 26 C.F.R. §1.704-1(b)(2)(ii)(b), (d)

Election desk Receives the numbers in March. Not the reasons.

The day numbers are a specimen sequence, not a client's file: an ordinary interval between a formation, a raise, an agreement executed on day 174 and an election filed on day 471. The oxblood bar runs from day 174 to day 1,204 — the two signatures, and the first time anyone held them up against each other.

What is to scale, precisely: the empty stretches between the marks, against each other, at one fixed rate. What is not: the marks themselves, because an event takes one day and several inches of prose. The column is empty in every rung because nothing is scheduled to happen in it. Change the day numbers and the bar changes height; the shape of the argument does not move.

The person who drafts the agreement is not thinking about the election. The person who makes the election has not read the agreement.

Nobody owns the join.

Thirty minutes, before the agreement is executed, is the only appointment that ever gets made in that column.

Part three — six provisions, read against one requirement tick what you can see · it goes into part eight

Six provisions that decide whether you have one class of stock

The chain above argues one specimen agreement. This is the reading you can do tonight, on your own words — six things to look for in the distribution, liquidation and voting articles, and what each one is tested against. Two of the six are fine, and one of those is the item owners worry about most. Tick anything you recognise and the draft in part eight will name it.

A preferred return, a priority return, or any “first, to…” language in the distribution article.Breaks

Rights to distribution proceeds — §1.1361-1(l)(1) 02

Units in more than one class or series: Class A and Class B, common and preferred, or a profits interest.Breaks

Rights to distribution proceeds — §1.1361-1(l)(1) 03

Different rights on liquidation or dissolution for any member or any class.Breaks

Rights to liquidation proceeds — §1.1361-1(l)(1) 04

Targeted allocations, or allocation language driven by a hypothetical liquidation at the end of each year.Different branch

A §704(b) question, not a §1361 question — 26 C.F.R. §1.704-1(b)(2) 05

A buy-sell, redemption or transfer restriction priced at something other than fair market value.Turns on facts

Usually disregarded — §1.1361-1(l)(2)(iii)(A) 06

Differences in voting or management rights, and nothing else.Expressly permitted

Voting differences are allowed by statute — 26 U.S.C. §1361(c)(4)

Nothing ticked is a fine answer, and it is the usual one. Most owners have never read their own agreement against these six, and the first five minutes of a call is often spent doing precisely that.

Set out in full

The regulation these six are read against is copied out word for word on the entity and election sheet, with the operative phrases marked and glossed in the margin. This list is the short form of it.

None of this can see your actual words, any side letter or any subscription agreement, and whether any of it matters depends on the specific facts. Nothing is transmitted and nothing is stored: the marks live in this browser tab and go no further than the message part eight writes for you.

So put one in it. The only appointment that was ever available in that column is a half hour before the agreement is executed.

Book a consultation $200 · 30 minutes · by video

Part four — the arithmetic no email, no form, nothing asked of you

What a year of asking costs

The reason people guess is that they cannot price the alternative. So here it is, at the published rates, with the first pass printed in full — because the first pass is the one everybody does in their head, and it is wrong by about three times.

Schedule — a year of short questions

runs in your browser · nothing transmitted

Questions you would actually pick up the phone for, in a year 14calls

160

How long the average one runs 20minutes

5 min90 min

The page argues back

This is roughly the shape the arrangement is built for: a short call every few weeks, before the thing gets signed rather than after.

Pass one — the way it gets quoted in your head

Every call rounded up to a full billable hour, because that is how most people assume a lawyer bills.

14 calls × 1 hour × $395 $5,530

Void — that is not the rate

Correction one — the rate is hourly, not per call

Her rate is $395 an hour. Twenty minutes is a third of an hour and bills as a third of an hour.

280 minutes = 4.7 hours × $395 $1,843

Correction two — the first conversation is not hourly at all

It is the initial consultation: $200 for thirty minutes, which annualizes to $400 an hour — five dollars more than the rate that follows it. The first conversation costs slightly more than the ones after it, and there is no version of this page where pretending otherwise is worth it.

Initial consultation, 30 min, by video$200

13 calls after it, 4.3 hours × $395$1,712

What a year of asking costs

$137 a question · 4.8 hours on the phone $1,912

$0hatched: one operating agreement, $1,500–$10,000$12,000

A year of asking lands at $1,912, inside the same range as writing one operating agreement.

Everything this assumes, stated in full

The rates are the published rates and nothing else: $200 for the first thirty minutes, $395 an hour after that. Nothing here is discounted, bundled or invented.

It counts her time only. No filing fees, no franchise tax, no registered agent, no state charges, no accountant, no other side's counsel.

Time is treated as an exact fraction of an hour: twenty minutes bills as 0.33 hours. [[UNVERIFIED — billing increment. Confirm whether time is recorded in tenths of an hour and whether any per-call minimum applies, then correct this line and the arithmetic above.]]

Only the first conversation of the year is priced as an initial consultation. If you are already a client, the $200 line does not apply to you and the total falls.

This is arithmetic at published rates. It is not a quote and it is not legal advice. What any engagement costs depends on the specific facts.

The calculation runs in your browser. Nothing you move is transmitted, stored or seen, and there is no form anywhere on this page.

The first line of that arithmetic is $200. Every other line on it is optional, and none of it is due today.

Book a consultation PayPal · paid before the call

Part five — work this office refuses said here, not on the phone

What she does not do

Divorce
Family law
Litigation
Documents sold on their own

No divorce. No family law. No litigation of any kind. It is written here so that nobody pays $200 to find out. If what you need is a courtroom or a marriage, this is the wrong office and you should keep your money.

This is a transactional practice: entity work, operating agreements, federal tax planning, contracts, and being on call for the questions in between.

The last exclusion is the one that costs her revenue. A template is the cheapest part of a decision and the part you were always going to get approximately right.

What is worth paying for is somebody deciding which clauses your deal actually needs — and that judgment does not survive being sold as a download. [[PRODUCT ENTITY — the name of the separate entity through which any educational product is sold. Not settled; do not write either name in until it is.]]

Part six — the warrant checkable in two public registries

Who answers the phone

The claim on this page is that one person holds both halves of the question. That is not a slogan and it is not a personality. It is registry data, and you can check it before you call.

State Bar of Texas Olinda Michelle Woodruff Bar no. 24121898 · admitted 12/2020 · active

Maryland Board of Public Accountancy Certified Public Accountant Maryland licence — not a Texas CPA licence

University of Houston Law Center LL.M. Taxation, and Juris Doctor [[GRADUATION YEARS — owed]]

University of Nebraska–Lincoln B.S., High Honors [[GRADUATION YEAR — owed]]

Federal court admissions [[NOT YET SUPPLIED — publish nothing in this row until the admissions are confirmed]]

Two registries, two states, and the second one stated precisely: the CPA licence is Maryland, the bar licence is Texas. [[UNVERIFIED — Texas advertising rules govern how a lawyer may state another professional designation. Confirm the permitted wording before this section is published.]]

Thirty years in tax as an accountant. A lawyer since 2020. That ordering is the whole point. Most attorneys hand the tax question to a CPA. Most tax people do not draft the entity documents. She has been paid to do both jobs, in that order.

So the operating agreement and the election get decided in one conversation instead of two, and the decision is made before either document is signed rather than reconstructed afterwards from what both of them say.

The companies she works with most are technology and fitness start-ups, and real estate businesses. Every engagement runs by video, telephone and email, anywhere in the country, without anybody traveling.

Her five practice areas, in the order she ranked them herself

1Outside general counsel
2Entity selection and formation
3Operating agreements
4Federal tax planning
5Contract review and drafting

Those five are one practice rather than five services. In a company with revenue and no in-house lawyer they were never separate questions: the entity decision is a tax decision, the tax decision gets written into the operating agreement, and the operating agreement is the contract that governs the argument nobody has had yet.

That is who picks up. Not an intake coordinator writing your answers down for somebody else to read later.

Book a consultation Mon–Fri 9:00am–5:00pm

Part seven — before you call answered here rather than on the meter

Questions owners ask first

Ten answers, none of them a brochure. Three of them tell you when the answer is no, and one of them is the only place on this page that mentions the 2025 act, because a tax figure printed in the wrong year is worse than no figure at all.

Does a preferred return automatically end an S election?

No. It puts the question on the table. The statute allows one class of stock, and the regulation treats shares as one class only where they confer identical rights to distribution and liquidation proceeds.

A priority return is a right one member holds and the others do not, so the analysis has to be run on the actual words of your agreement. Whether it is fatal depends on the specific facts.

26 U.S.C. §1361(b)(1)(D) · 26 C.F.R. §1.1361-1(l)(1)

Can an LLC elect to be taxed as an S corporation?

Yes, and it is done in one step rather than two. A domestic LLC that is eligible to be treated as a corporation may file Form 2553 and be deemed to have elected association status along with it, so no separate Form 8832 is required.

Eligibility is the part that catches people. The entity has to meet every requirement of a small business corporation, including the one this page is about: not more than one class of stock. The form does not ask for your operating agreement, and the operating agreement is what that requirement is measured against.

26 U.S.C. §1362(a) · 26 C.F.R. §301.7701-3(c)(1)(v)(C)

What is outside general counsel, and how is it different from a retainer?

Outside general counsel is the arrangement a company uses when it has real revenue, recurring legal questions, and nobody in-house to ask. One lawyer who has read your documents, who you can call with a twenty-minute question, and who does not have to be brought up to speed every time.

Here it is not a subscription and there is no monthly minimum, because this office does not currently offer one. It is the published hourly rate for questions and a flat fee quoted in advance for work with a defined shape. The difference from a retainer is that you are not pre-paying for a block of hours you may not use.

What does the $200 actually get me?

Thirty minutes with the attorney, by video. Not with an intake coordinator writing your answers down for somebody else to read later.

You pay it by PayPal before the call. If thirty minutes is obviously not going to cover what you have described, she will say so before you pay rather than after.

Do I have to sign a monthly retainer?

No, because there is not one to sign. Pinnacle Law does not currently offer a monthly subscription, and this page is not going to describe one that does not exist.

Work after the initial consultation is billed at $395 an hour, or at a flat fee quoted in advance where the work has a defined shape. An operating agreement is $1,500 to $10,000, quoted before it starts.

Our members have different voting rights. Is that a second class of stock?

No. Differences in voting rights are expressly permitted by statute. It is the item owners ask about most often and it is the one item on the list that is safe on its face.

26 U.S.C. §1361(c)(4)

The 2025 tax act changed things. Does my structure still work?

It is the right question and it is the reason this is a good year to have somebody read the documents. The act signed in July 2025 made the deduction for qualified business income permanent and restored full first-year expensing, among a great deal else.

You will find no 2026 dollar figures on this page. Thresholds and phase-in ranges move, and a number published in the wrong year is worse than no number, so the thresholds are quoted on the call against the current text rather than printed here to go stale.

What has not changed is the join. Every pass-through in the country was structured under rules that have now moved, and the operating agreement that was drafted under the old ones is still the governing provision.

P.L. 119-21 · 26 U.S.C. §199A · §168(k)

I am not in Texas. Can you still help me?

She is admitted in Texas. A large part of what a business owner needs is federal, and the Internal Revenue Code does not change at a state line: the election, the allocation rules, the deduction.

Questions that turn on your entity's home-state statute, or on your own state's tax, may need counsel licensed where you are. She will say so when it happens rather than guess, and saying so is part of what you are paying for.

Do you handle divorce, family law or litigation?

No, none of the three. It is in writing on this page so that nobody spends $200 finding out.

Is anything on this page legal advice?

No. Information on this site is not legal advice, and use of this website does not create an attorney-client relationship.

The arithmetic above prices time at published rates. It is not a quote. What a provision does in your agreement, and what an engagement costs, depends on the specific facts of your situation and on law that changes.

Part nine — table of authorities every citation, out to the text and back to the line

Everything this page relies on, and where it is used

Eighteen authorities. The left column goes out to the text on a public source; the right column comes back to the paragraph on this page that uses it. If a citation is not doing work somewhere above, it is not in this table.

Authorities cited

18 entries · cite-checked [[DATE — set on publication]]

Statutes — Internal Revenue Code, Title 26

26 U.S.C. §168(k)Part VII

Where first-year bonus depreciation lives. Restored to full expensing by the 2025 act.

26 U.S.C. §199APart VII

The deduction for qualified business income. Made permanent by the same act. No threshold figure is printed on this page.

26 U.S.C. §704(a), (b)Rung 07

Allocations follow the partnership agreement unless they lack substantial economic effect.

26 U.S.C. §761(c)Rung 07

What counts as the partnership agreement, including amendments made before the return is due.

26 U.S.C. §1361(b)(1)(D)Rung 05 · item 1

A small business corporation may not have more than one class of stock. The whole of part two turns on this.

26 U.S.C. §1361(c)(4)Item 6

Differences in voting rights are expressly permitted and do not create a second class.

26 U.S.C. §1362(a)Rung 04

How the election is made, and by whom it has to be consented to.

26 U.S.C. §1362(f)Rung 06

Statutory relief where an invalid election or a termination was inadvertent.

Regulations — 26 C.F.R.

§1.704-1(b)(2)(ii)(b), (d)Rung 07

The three-part economic effect test: capital accounts, liquidation by positive balances, and a deficit restoration obligation or a qualified income offset.

§1.704-1(b)(2)Item 4

Where a targeted allocation is tested. A different branch of the analysis from §1361.

§1.1361-1(l)(1)Rung 05 · items 1–3

Shares are one class only where they confer identical rights to distribution and liquidation proceeds.

§1.1361-1(l)(2)(i)Rung 05

The governing provisions, defined to include binding agreements relating to those proceeds.

§1.1361-1(l)(2)(iii)(A)Item 5

Buy-sell and redemption agreements, and when they are disregarded.

§301.7701-3(b)(1)(i)Rung 01

The default classification of a domestic multi-member LLC as a partnership.

§301.7701-3(c)(1)(v)(C)Rung 04

The deemed association election that rides along with a Form 2553.