S Corporation Income Taxation

Navigating the QSBS rules in pass-through structures

The rules for qualified small business stock become more complex when it is held through a pass-through entity or when the corporation operates through one or more partnerships. This article discusses QSBS eligibility rules, planning opportunities, and areas of uncertainty.

Avoiding state tax surprises from collaboration agreements

Collaboration agreements, especially in the life sciences, sometimes unexpectedly transcend state boundaries, with consequences for companies’ apportionment and sales factor revenue sourcing.

Using a divisive D reorganization to shift ownership by creating a new S corporation

A Type D tax-deferred spinoff or split-off followed by an S election may be available if the reorganization meets the requirements of Sec. 355 and Sec. 368(a)(1)(D), including a valid corporate business purpose.

Current developments in S corporations

This annual update covers recent developments, including court cases and selected administrative changes occurring in the 12 months ending March 2026.

Identifying the final C corporation and initial S corporation tax years

Rules determine allowable tax years after a C corporation elects S status.

When is a QSub election considered timely filed?

An F reorganization may raise a host of issues pertaining to timely filing of a qualified Subchapter S subsidiary election.

Buy/sell agreements for S corporations

These common instruments raise special considerations in the S corporation context.

PTEs need more notice of changes, more time to respond, AICPA says

In a letter to Treasury and the IRS, the AICPA seeks changes to tax reporting requirements for partnerships and S corporations.

Late election relief in recent IRS letter rulings

The IRS may grant a reasonable extension if the taxpayer provides satisfactory evidence of acting reasonably and in good faith and the relief will not prejudice the government’s interests.

IRS withdraws prop. regs. affecting corporate spinoff transactions

The proposed regulations were withdrawn in response to comments that criticized the proposed guidance, according to the IRS.

Deferring gain in liquidation with an installment sale and noncompete agreement

Liquidating S corporations may defer corporate-level gain by distributing a qualifying installment obligation arising in a 12-month liquidation period; a planning strategy pairs this exception with a noncompete agreement.

Guidance on research or experimental expenditures under H.R. 1 issued

The revenue procedure advises taxpayers how to make various elections, file amended returns, and change accounting methods as provided under Section 70302 of the new law.

AICPA presses IRS for guidance on domestic research costs in OBBBA

In its letter, the AICPA said small businesses that have not filed returns for the 2024 filing period face uncertainty about how to treat domestic research and experimental expenditures.

IRS includes several AICPA recommendations in corporate AMT interim guidance

In a notice issued Tuesday, the IRS said it intends to partially withdraw proposed regulations and issue revised proposed regulations.

Current developments in S corporations

This annual update covers recent developments relating to S corporations, including IRS relief for common inadvertent S election lapses; the transfer of clean-energy credits; and other cases, rulings, and regulations.

AICPA makes Priority Guidance Plan recommendations to IRS

In addition to its 183 recommendations for the IRS plan, the AICPA encouraged the agency to continue to pursue tax simplification.

Simplified method to determine corporate AMT applicable status issued

A notice issued by the IRS with interim guidance for the application of the corporate alternative minimum tax offers an optional simplified method for determining applicable corporation status under Sec. 59(k).

How S elections go wrong and how to fix them

Problems with S elections frequently cause them to be invalid when made or to terminate. This article discusses four of the most common ones and three revenue procedures that may enable S corporations to fix them without obtaining a costly letter ruling.

Deemed liquidation on electing QSub status

An S corporation’s qualified Subchapter S subsidiary election for an existing corporation is a deemed tax-free liquidation under Secs. 332 and 337 if certain requirements are met.

How Trump’s opposition to global tax deal may affect businesses

The Trump administration has rejected the OECD’s initiative to reform the taxation of multinational enterprises. Learn more about the executive action in this Q&A with an international tax expert.
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