S Corporation Income Taxation

Changes to the BIG Recognition Period of Sec. 1374(d)(7)

The potential effect of the built-in-gain tax is often a significant consideration during pending acquisitions involving an S corporation.

Life Insurance and S Corporations: Unique Rules Present Opportunity and Peril

This column outlines the special considerations and issues related to life insurance policies for S Corporations.

Calculating Basis in Debt

Direct shareholder loans to an S corporation can be very important tools for tax planning.

Should S Corporations Get Ordinary Loss Treatment for Losses on Subsidiary Stock?

The question of whether an S corporation should be treated the same as a C corporation when its subsidiary corporation is insolvent has not been definitively answered.

Is It Rent? That Depends on the Lease

A recent Tax Court decision sheds light on the importance of lease terms to determine what is rent and how Sec. 467 may apply to advance rents.

Tax Considerations for Cancellation-of-Debt Income

This item provides an overview of the U.S. income tax implications of cancellation-of-debt income that results from bankruptcy or insolvency, with a focus on the differences in the tax treatment for C corporations, S corporations, and partnerships.

The Importance of Being Flexible: Choice-of-Entity Considerations

This item presents an overview of some of the tax points that should be kept in mind when choosing an entity. 

IRS Clarifies That a Former QSub Cannot Prorate Post-Termination Items of Income or Loss

IRS addressed whether an S corporation and its wholly owned subsidiary, a QSub, must prorate annual income following a midyear voluntary revocation of subchapter S election.

The Transfer of Loss Property Between an S Corporation and Its Shareholders

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.

S Corp. Shareholder Basis and Debt

The IRS issued final regulations addressing the basis of indebtedness of S corporations to their shareholders.

Making a Trust an Eligible S Corp. Shareholder: QSST and ESBT Elections

This item describes eligible shareholder trusts and the elections they must make.

Computing the Domestic Production Activities Deduction for Passthrough Entities

Some unique issues can arise when computing the domestic production activities deduction for a passthrough entity.

QSST Not Necessarily Required to Pay All Income to Beneficiary

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.

Installment Sale Rules and S Corp. Asset Sales: Planning for Better Results

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 Rules Issued on Bona Fide Indebtedness and Terminating Partnership’s Startup Expenses

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.

Impact of Sec. 1411 on S Corporations and Their Shareholders

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.

Maintaining Single Taxation: Sec. 336(e) and S Corporations

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.

Determining the Taxability of S Corporation Distributions: Part II

This article covers the taxability of distributions from an S corporation with accumulated E&P and ancillary issues and planning opportunities.

Late S Corp. Return Not an Income Disclosure Despite Reference in Stockholder’s Form 1040

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.

Determining the Taxability of S Corporation Distributions: Part I

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.
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