Reporting & Filing Requirements

Rough Sailing for TEFRA Partnerships

Several recent cases illustrate the need for taxpayers to be extremely careful when involved in a Taxpayer Equity and Fiscal Responsibility Act audit.

QSub Status Is Not Property of Bankruptcy Estate

An S corporation’s revocation of its S corporation status, which caused its QSub subsidiary to lose its status as a QSub, was not a post-bankruptcy-petition transfer of property of the QSub’s bankruptcy estate.

QSub Election Does Not Increase Shareholder Stock Basis

The Tax Court held that shareholders of an S corporation improperly increased the adjusted basis of their S corporation stock when the S corporation made a QSub election for its wholly owned C corporation subsidiary.

Current Developments in Partners and Partnerships

This article reviews and analyzes recent rulings and decisions involving partnerships. The discussion covers developments in partnership formation, income allocations, and basis adjustments.

Current Developments in S Corporations

During the period of this S corporation tax update, some major changes that directly affect S corporations took place. This article also presents tax planning ideas for S corporations and their shareholders.

Operating a QSub

A qualified subchapter S subsidiary (QSub) is a subsidiary corporation 100% owned by an S corporation that has made a valid QSub election for the subsidiary.

Current Developments in Partners and Partnerships

This article reviews and analyzes recent rulings and decisions involving partnerships.

Regs. Extend Religious and Family Member FICA, FUTA Exceptions to Disregarded Entities

Temporary and proposed regulations extend the religious and family member FICA and FUTA tax exceptions to disregarded entities.

QSSTs and ESBTs: No Longer Mutually Exclusive

Under Letter Ruling 201122003, if a current ESBT allows for separate and independent trust shares under the trust document, a trust may be treated as both an ESBT and a QSST. This ruling opens the door for additional planning for gifts of S corporation stock to younger generations.

Current Developments in Partners and Partnerships

This article reviews and analyzes recent rulings and decisions involving partnerships. The discussion covers developments in partnership formation, debt and income allocations, distributions, passive activity losses, and basis adjustments during the period November 1, 2009–October 31, 2010.

Current Developments in S Corporations (Part II)

This article discusses S corporation eligibility, elections, and termination issues from the period July 2009–July 2010.

QSubs Included in Definition of S Corp. for Purposes of Sec. 291(a)(3)

In Vainisi, the Seventh Circuit reversed a decision in which the Tax Court held that the 20% interest expense reduction imposed by Sec. 291(a)(3) would apply to a qualified subchapter S subsidiary (QSub) bank even for its tax years following the third year after it converted from C corporation to S corporation status.

Current Developments in Partners and Partnerships

This article reviews and analyzes recent rulings and decisions involving partnerships. The discussion covers developments in partnership formation, debt and income allocations, distributions, passive activity losses, and basis adjustments.

C Corporations as S Corporation Subsidiaries

An S corporation can elect to treat a 100% owned subsidiary as a qualified subchapter S subsidiary (QSub), which causes the subsidiary to be disregarded for most federal tax purposes. The subsidiary must be a corporation that would be eligible to be an S corporation if the shareholders of its parent S corporation held its stock directly.

Partner Allowed to Make Different Elections for Different Partnership Interests

The Tax Court held that taxpayers owning multiple interests in the same partnership were entitled to make different elections under Sec. 6223 for each interest.

F Reorg. of an S Corp. May Require a New EIN

Rev. Rul. 2008-18 posits two situations in which an S corporation becomes a QSub of a newly formed corporation that will qualify as an F reorganization. The ruling also provides new guidance on the proper employer identification number (EIN) to be used by the entities in each situation.

Current Developments in S Corporations (Part II)

This article covers S corporation operational issues.

QSubs Recognized as Separate Entities for Employment and Excise Taxes

Editor: Kevin F. Reilly, J.D., CPA The IRS has issued final regulations that treat qualified subchapter S subsidiaries (QSubs) and other disregarded entities (DEs) as separate entities for federal employment tax and certain excise tax purposes (TD 9356). Although the regulations are effective as of August 16, 2007, the employment

Current Developments in S Corporations (Part I)

Part I of this two-part article discusses S corporation eligibility, elections, and termination issues, including several changes related to the Small Business and Work Opportunity Tax Act of 2007.
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