S Corporation Income Taxation

Rolling over shares upon S corporation’s acquisition

This item discusses nonprorated S corporation rollovers and the unexpected tax consequences.

Questions to consider before electing into a PTE tax

Twenty-nine states have enacted a passthrough entity tax as a possible workaround to the federal state and local tax deduction cap.

State PTE elections: A big picture perspective

Practitioners may face a difficult analysis in helping their clients understand their possible PTE election opportunities.

Avoiding inadvertent termination of an S election

A number of disqualifying events can terminate a corporation’s S status, and not all of those events are listed in the statute or immediately obvious.

Current developments in S corporations

The AICPA S Corporation Taxation Technical Resource Panel summarizes recent developments.

Trusts as S corporation shareholders

Generally, a trust cannot hold stock of an S corporation; however, grantor trusts, testamentary trusts, voting trusts, ESBTs, and QSSTs are permissible S corporation shareholders (Sec. 1361(c)(2)).

Tax planning and considerations: S corporation targets

Approval of an S election by the IRS and/or a state jurisdiction does not mean that S corporation status remains safe and sound forever.

Trusts for holding S corporation interests: QSSTs vs. ESBTs

This article compares the relative advantages and disadvantages of a QSST versus an ESBT in estate planning.

Schedules K-2 and K-3 e-file capability postponed for S corporations

The IRS delays e-filing capability for schedules reporting S shareholders’ items of international tax relevance, earlier forecast for mid-June, to July 24.

More Schedule K-2 and K-3 FAQs posted

In eight new FAQs on its website, the IRS covers some special issues, including several that it says will be added to the forms’ instructions.

Making tax-free distributions to the extent of AAA

AAA and AE&P calculations are key to determining stock basis and, thus, the taxability of shareholder distributions.

Illegal tax shelter seller finds no shelter in stock forfeiture provision

S corporation stock was not subject to a substantial risk of forfeiture because the stock forfeiture provision was unlikely to be enforced.

IRS waives estimated-tax penalties for farmers and fishermen

The IRS, citing earlier problems e-filing a new form reporting S corporation owners’ basis, has granted relief to certain farmers and fishermen who missed their March 1 filing deadline.

Complying with new schedules K-2 and K-3

What partnerships, S corporations, and others with foreign partnership interests need to know for tax year 2021 and beyond.

S corporation shareholder recomputation of basis

stock and debt basis under Sec. 1366(d)(1). Failing to properly track basis may require a recomputation of the shareholder’s basis.

SALT payments before year end a priority for passthroughs

To be deductible at the entity level, payments by passthrough entities of state and local taxes should be made in the tax year of the liability, but state-specific elections may complicate that timing, tax advocates advise.

Minimizing a hobby loss issue by electing S status

To avoid the hobby loss rules, with their limitation on deductible expenses, an activity must be engaged in for profit; electing S status can help a taxpayer establish profit motive.

Illinois PTE tax would provide SALT cap workaround

This item discusses Illinois Legislature’s S.B. 2531, which includes a PTE tax that allows a workaround to the federal $10,000 limitation for state and local tax deductions.

Comparing stock sales and asset sales of S corporations

The issue of a stock sale versus an asset sale raises a number of significant issues to be considered by S shareholders.

Current developments in S corporations

This update on recent developments in taxation relating to S corporations includes cases and rulings on eligible terminated S corporations, S corporation income and losses, the one-class-of-stock requirement, and other issues.
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