S Corporations

The New Five-Year Built-In Gain Recognition Period

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.

Reasonable Compensation for S Corporation Shareholder-Employees

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.

Current Developments in S Corporations

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).

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.

Deducting S Corporation Losses to Extent of Shareholder Basis

An S corporation shareholder reports corporate income or loss on the personal income tax return for the year in which the corporate year ends; losses or deductions passed through to the shareholder first reduce stock basis, then loss amounts are applied against debt basis.

Check-the-Box: A Trap for the Unwary

It has never been easier to effect the choice of operating as a sole proprietorship, partnership, or corporation for federal income tax purposes; however, sometimes unforeseen problems can result.

IRS Not Allowed to Reclassify Passive Activity Income

The Tax Court held the IRS could not reclassify the taxpayer’s income from the rental of cellphone towers and the land they were situated on to his wholly owned S corporation as nonpassive income under the self-rental rule. 

“Cliff” Law Reconfigures Tax Preparation and Planning

With its scores of new and extended provisions, the American Taxpayer Relief Act offers something for nearly all taxpayers and their preparers to assess and implement as they begin preparing 2012 returns and plan for the future.

Newsletter Articles

SPONSORED REPORT

Tax reform changes are now in effect

With all the recent tax law changes, this year it’s more important than ever to make sure your clients’ tax situations are squared away before year end. This report provides necessary guidance to ensure 2019 starts without a hitch.

DEDUCTIONS

Understanding the new Sec. 199A business income deduction

The new deduction allows certain business owners to keep pace with the significant corporate tax cut provided by the Tax Cuts and Jobs Act.