Distributions & Shareholder Basis

Topics

October 1, 2024

Advising S corporation clients on reasonable compensation

Advising owner-shareholders can prove invaluable in meeting guidelines for distinguishing compensation from distributions.

April 1, 2023

Interaction of S shareholders’ loss limitations

Shareholder basis and other applicable loss limitations must be applied in a specified order, with differing rules.

February 1, 2023

The ‘one class of stock’ requirement: An interesting letter ruling

While it might stand to reason that if there is only one shareholder, then there can be only one class of stock, that is not necessarily what the Code and regulations provide.

May 1, 2022

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)).

April 1, 2022

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.

February 1, 2022

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.

June 1, 2021

Compensatory split-dollar life insurance benefits are compensation

Economic benefits from a compensatory split-dollar
life insurance arrangement are not property distributions.

December 1, 2020

Taxpayer not a shareholder of not-for-profit corporation

The president and a director of a not-for-profit is not its beneficial owner and cannot be a shareholder of it.

May 1, 2020

Current developments in S corporations

This annual update on S corporations covers cases, regulations, and IRS rulings that have been issued in the last year, including the rules for eligible terminated S corporations.

March 1, 2019

Current developments in S corporations

This update on recent developments in taxation relating to S corporations includes cases and rulings on eligible shareholders, electing small business trusts, inadvertent S election terminations, and other issues, as well as changes made by the TCJA.

December 20, 2018

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.

December 1, 2018

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.

November 1, 2018

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.

May 1, 2018

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.

April 1, 2018

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.

December 1, 2017

Structuring loans for S corp. shareholder basis planning opportunities

An understanding of S corporation basis rules enables practitioners to assist clients in taking advantage of planning opportunities aimed at maximizing deductible passthrough losses.

December 1, 2017

Current developments in S corporations

The AICPA S Corporation Taxation Technical Resource Panel offers a summary of recent court decisions and IRS guidance.

August 1, 2017

The importance of tracking AAA and E&P in transactions involving S corps.

Tracking these accounts is important if an S corporation enters into certain transactions such as redemptions, liquidations, reorganizations, or corporate separations.

December 1, 2015