S corporations and their shareholders often engage in transactions in which they transfer property with a basis greater than its FMV. This article examines the tax effects on both shareholders and the corporation.
This item describes eligible shareholder trusts and the elections they must make.
The IRS issued final regulations addressing the basis of indebtedness of S corporations to their shareholders.
While the Seventh Circuit's decision in Vainisi was favorable for S corporation banks investing in tax-exempt obligations, those banks nonetheless must pay close attention to the specific type of tax-exempt obligations they purchase if they expect to reap the benefits of that decision.
If a qualified subchapter S trust (QSST) owns both S corporation stock and other assets, determining whether the income from the other assets must be distributed to the beneficiary depends on the terms of the trust document.
Some unique issues can arise when computing the domestic production activities deduction for a passthrough entity.
When consulting on S corporation asset sales or sales treated as asset sales from a tax perspective, tax practitioners need to be aware that different tax consequences than expected can sometimes result under the installment sale rules of Sec. 453.
Final regulations were issued on S corporation shareholder basis of indebtedness of the S corporation to the shareholder only if the indebtedness is bona fide and on the deductibility of startup expenditures and organizational expenses for partnerships following a termination of a partnership.
One of the more significant changes to the tax landscape in recent years is the new 3.8% tax on net investment income under Sec. 1411. This tax, which was further clarified in recently finalized regulations, will affect many entities and taxpayers including S corporations and their shareholders. This discussion outlines noteworthy aspects of these rules pertaining to S corporations and their owners.
Final regulations under Sec. 336(e) provide special rules for S corporations and their shareholders to make an election to treat a sale or disposition, including a distribution of control of a corporation’s stock of a qualified subsidiary, as a disposition of all the subsidiary’s assets.
This article covers the taxability of distributions from an S corporation with accumulated E&P and ancillary issues and planning opportunities.
This two-part article provides a comprehensive review of the rules for determining the taxability of an S corporation’s distributions to its recipient shareholders. Part I provides an overview of the intent of Sec. 1368 and the related regulations, the shareholder- and corporate-level attributes that drive a distribution’s taxability, and the rules for determining the tax consequences of distributions made from an S corporation without accumulated earnings and profits.
When information disclosing income that should have been included in the taxpayer’s return is provided to the IRS after the return is filed, that information is not considered to be disclosed on the return.
In some situations, business owners have state-law reasons for wanting their business to be formed as a limited liability company, but for tax purposes they would prefer S corporation (rather than partnership) tax treatment.
ATRA extended the five-year recognition period for the BIG tax to 2012 and 2013 and also changed the BIG tax treatment of installment sales and carryovers of built-in gain not taxed in the year recognized because of the taxable income limitation.
Two recent Tax Court opinions focusing on reasonable compensation for S corporation shareholder-employees provide important takeaways for owners and practitioners by addressing common issues surrounding distributions and loan repayments in the context of reasonable compensation.
The IRS ruled that S corporation members of a controlled group may use the Sec. 179 election up to the maximum election amount as if they were separate entities, and are not subject to the controlled group’s overall limit.
The exclusion of S corporations from component membership in controlled groups of corporations multiplies the planning opportunities for businesses under common control but calls for vigilance by tax professionals to use this deduction wisely.
This article discusses major changes and developments that directly affect S corporations and their tax advisers during the period of this update (July 10, 2012–July 9, 2013).
A taxpayer’s basis is often scrutinized by the IRS, particularly when basis is claimed based upon debts incurred by a flowthrough entity.