Many factors must be considered when electing S status for a new corporation or converting an existing C corporation to ensure a timely election.
Regulations explicitly require elections to be made by the corporation, and shareholders themselves cannot change these elections.
This item discusses how a back-to-back loan is a viable option for shareholders who want to increase their debt basis in an S corporation.
This discussion sheds light on these questions with an overview of the applications of Secs. 302 and 301 to S corporation redemptions.
An S corporation shareholder cannot unilaterally change an S corporation’s tax election in order to claim FICA tip credits.
The benefit of a state income tax credit, if it is earned in a state where the owner is not resident, is often lost.
In the typical closely held business context, the TCJA’s reduction of corporate tax rates to a flat 21% is far from a panacea.
Individuals, partnerships, or other noncorporate entities that could not benefit from a Sec. 338(h)(10) election may be able to qualify for a Sec. 336(e) election.
The IRS announced that S corporations are subject to the new extended three-year holding period applicable to carried interests.
The new deduction allows certain business owners to keep pace with the significant corporate tax cut provided by the Tax Cuts and Jobs Act.
Loans among related entities were not bona fide indebtedness that would give rise to debt basis in an S corporation for the shareholder.
As a result of tax reform, which provides for a significant decrease in the corporate tax rate and a more modest decrease in passthrough tax rates, business owners may consider revoking S corporation elections.
The IRS announced that the new three-year holding period for carried interests applies to S corporations as well as partnerships.
The Tax Court held that the taxpayers’ poor relations with other shareholders of an S corporation did not affect their ownership interest in the corporation.
All companies should maintain supporting documentation for payments.
Tax Court held that amounts passthrough business entities paid to a purported insurance company they owned were not premiums paid for insurance contracts and not deductible.
IRS announced it will not acquiesce to a Tax Court ruling in which it held that a taxpayer’s disposition and acquisition of property was not a self-exchange and qualified for Sec. 1031 nonrecognition treatment.
A taxpayer was not entitled to a passthrough loss from the dissolution of an S corporation because the dissolution was part of a tax structure that did not have economic substance.
The AICPA S Corporation Taxation Technical Resource Panel offers a summary of recent court decisions and IRS guidance.
An understanding of S corporation basis rules enables practitioners to assist clients in taking advantage of planning opportunities aimed at maximizing deductible passthrough losses.