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.
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Topics
Shareholder Transactions
Buy/sell agreements for S corporations
These common instruments raise special considerations in the S corporation context.
Corporate AMT prop. regs. impose new partnership information tracking system
This article outlines a five-step process for calculating a corporate partner’s distributive share related to the application of the corporate alternative minimum tax imposed on an applicable corporation pursuant to Sec. 56A.
Cleaning up intercompany debt
An intercompany loan between related corporations may be recharacterized as an equity contribution by the companies’ shareholders, resulting in a constructive dividend to the shareholders. This article focuses on a recent Tax Court case involving the proper characterization of purported intercompany loans between two S corporations.
Corporate AMT proposed regulations issued; some penalties waived
The IRS issued proposed regulations providing guidance on the corporate alternative minimum tax (AMT) and a notice that waives the penalty for failure to pay estimated tax with respect to the corporate AMT for 2024.
The double-tax consequences of an S corporation subject to BIG tax
A corporation’s built-in gains (BIG) tax cost of disposing of assets in liquidation within five years after its S election can be substantial.
Final regs. issued for 1% excise tax on corporate stock repurchases
The final regulations provide guidance regarding the reporting and payment of the excise tax on repurchases of corporate stock made after Dec. 31, 2022.
Proposed regs. issued for 1% excise tax on corporate stock repurchases
Two sets of proposed regulations issued by the IRS provide guidance on the implementation of the new excise tax and on rules for the procedure and administration applicable to the reporting and payment of the tax.
Recognizing transactions that trigger built-in gains or losses
Various types of transactions can cause an S corporation to incur built-in gains or losses, including Sec. 481 adjustments from a change in accounting method.
Rolling over shares upon S corporation’s acquisition
This item discusses nonprorated S corporation rollovers and the unexpected tax consequences.
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.
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.
Avoiding gain at the S shareholder level when a loan is repaid
When the basis in an S shareholder’s loan to the S corporation has been reduced by passthrough losses, repayment of the loan may be a taxable
event.
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.
Items and factors to consider in setting reasonable compensation
All companies should maintain supporting documentation for payments.
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.
Eighth Circuit Affirms S Corporation Shareholder’s Compensation Was Not Reasonable
The Eighth Circuit affirmed a lower court’s decision that an S corporation shareholder’s $24,000 salary was not reasonable compensation.
S Corporation Shareholder Compensation: How Much Is Enough?
This article looks at recent court decisions regarding S corporation shareholder reasonable compensation that provide helpful guidance on how an adviser can determine what is reasonable compensation.
S Corporation Reasonable Compensation
A recent district court decision highlights the employment tax risks to S corporations that are found to have paid unreasonably low compensation to shareholder-employees while making distributions to the same individuals.
Compensation Issues for Self-Employed S Corp. Owners
This item discusses how reporting a higher wage can actually maximize long-term profits for the owner-employee of an S corporation.
PRACTICE MANAGEMENT
2026 tax software survey
CPAs rate their return preparation software’s performance during this year’s tax season.
