IRS takes narrow view of aggregation under the at-risk rules
The IRS concluded that a taxpayer was not permitted to aggregate the S corporations with the partnership for the purpose of applying the at-risk rules of Sec. 465.
S Corporations
Economic benefits of life insurance premium payments are not includible in income
Economic benefits from an S corporation’s payment of a premium on a life insurance policy were not includible in the shareholder/employee’s income.
Capital contribution of reduced basis S corporation debt
The passthrough of S corporation losses to the extent of the shareholder’s basis in his or her stock and debt can be beneficial, but the resulting reduced basis debt may lead to taxable income on repayment of the debt.
Using R&D credits to reduce payroll taxes: An overlooked opportunity for startups
This article discusses who qualifies to take the credit, how to make the election, the calculation and allocation of the credit, and how to report it.
Amended returns satisfy statement-of-inconsistency requirement
A taxpayer’s amended returns sufficiently apprised the IRS of inconsistencies between the amended returns and the returns filed by the bankruptcy trustee of his wholly owned S corporation.
Changing from cash to accrual accounting after revoking an S election under TCJA
A terminated S corporation may remain a cash-basis taxpayer if its average gross receipts for the three previous tax periods are less than $25 million.
Converting from an S corp. to a C corp.
This item discusses the many tax ramifications of converting.
Filing a timely S election
Many factors must be considered when electing S status for a new corporation or converting an existing C corporation to ensure a timely election.
Shareholder cannot unilaterally change an S corp.’s election
Regulations explicitly require elections to be made by the corporation, and shareholders themselves cannot change these elections.
Loan guarantee does not increase S corp. shareholder’s debt basis
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.
S corporation redemptions: Navigating Secs. 302 and 301
This discussion sheds light on these questions with an overview of the applications of Secs. 302 and 301 to S corporation redemptions.
S corporation shareholder cannot take FICA tip credit
An S corporation shareholder cannot unilaterally change an S corporation’s tax election in order to claim FICA tip credits.
Potential pitfalls of state income tax incentives for passthroughs
The benefit of a state income tax credit, if it is earned in a state where the owner is not resident, is often lost.
Another look at C corp. vs. S corp. in light of tax reform
In the typical closely held business context, the TCJA’s reduction of corporate tax rates to a flat 21% is far from a panacea.
Sec. 336(e) elections for S corp. targets: Get a step-up without a letter ruling
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.
3-year holding period applies to S corporations
The IRS announced that S corporations are subject to the new extended three-year holding period applicable to carried interests.
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.
Intercompany transactions do not increase debt basis in S corporation
Loans among related entities were not bona fide indebtedness that would give rise to debt basis in an S corporation for the shareholder.
Converting from S corp. to C corp.: Select issues for consideration
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.
Longer carried interest holding period includes S corporations
The IRS announced that the new three-year holding period for carried interests applies to S corporations as well as partnerships.
