A qualified subchapter S subsidiary (QSub) is a subsidiary corporation 100% owned by an S corporation that has made a valid QSub election for the subsidiary.
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TOPICS / PASSTHROUGHS
S Corporation Income Taxation
Contributions Increase Shareholders’ S Corporation Basis
The Tax Court held that shareholders in two related S corporations could increase their basis in one of the corporations by contributing assets to it that they had received in a distribution from the other corporation.
Now Is the Time: Converting a C Corporation to an S Corporation or LLC
The current uncertain economic environment may present an opportunity to exit C status and its attendant double taxation at an acceptable current tax cost.
Proposed Regs. on Basis for S Corporation Shareholders From Bona Fide Indebtedness
The IRS issued proposed regulations on when an S corporation shareholder can increase basis in the S corporation’s stock based on loans to the corporation.
The Research Credit and Deduction for Passthrough Entities
Passthrough entities may be overlooking the research tax credit because they are not aware that they are engaged in eligible activities, do not think their activities are qualified, or do not believe they can meet the various requirements.
Reporting Dilemma: Personal Use of Rental Properties
Properly apportioning real estate expenses between personal and rental use presents several challenges.
Partially Taxable Asset Acquisitions from S Corporations
Selling shareholders of an S corporation commonly seek a partially tax-deferred rollover of equity. This item describes the differing results between a transaction accomplished through a Sec. 351 transfer and one structured as part sale/part contribution.
Obtaining a Waiver of an Invalid S Election
The IRS has authority to waive the effect of an invalid election of S corporation status. This article discusses different methods of relief.
Roth IRAs Cannot Be S Corporation Shareholders, Ninth Circuit Holds
The Ninth Circuit, affirming the Tax Court, held that a corporation whose sole shareholder was a Roth IRA was not a valid S corporation.
The S Corporation Built-In Gains Tax: Commonly Encountered Issues
This article examines five issues corporations commonly encounter in complying with the built-in gains tax.
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.
Providing Fringe Benefits to S Corporation Employees
In an S corporation, employee fringe benefits paid on behalf of a 2% shareholder are subject to special rules.
Tax Issues and the 2010 S Corporation Shareholder Decedent
A tax practitioner working with the estate of an S corporation shareholder who died in 2010 must contend with numerous issues. This article points out some of the issues and discusses some of the choices that can be considered.
Current Developments in S Corporations (Part II)
This article provides an annual update of recent IRS rulings, guidance, and other developments concerning S corporations. It discusses S corporation eligibility, elections, termination issues, second class of stock, and trusts owning S corporation stock.
Regs. Extend Religious and Family Member FICA, FUTA Exceptions to Disregarded Entities
Temporary and proposed regulations extend the religious and family member FICA and FUTA tax exceptions to disregarded entities.
Final Regs Clarify Excise, Employment Tax Treatment of Disregarded Entities
The IRS issued final regulations clarifying the treatment of disregarded entities with respect to employment and certain excise taxes.
QSSTs and ESBTs: No Longer Mutually Exclusive
Under Letter Ruling 201122003, if a current ESBT allows for separate and independent trust shares under the trust document, a trust may be treated as both an ESBT and a QSST. This ruling opens the door for additional planning for gifts of S corporation stock to younger generations.
Sec. 179D and Passthrough Entities
The Sec. 179D deduction available for building designers has unexpected consequences for design firms structured as passthrough entities.
Current Developments in S Corporations (Part I)
This two-part article discusses in the S corporation area. Part I covers new tax laws, court cases, regulations, revenue procedures, and rulings on various S corporation administrative and operating provisions.
Separately Identifiable Intangible Assets: Tax Opportunities and Traps
Treating self-created customer-based intangibles as assets separate from goodwill can result in more favorable tax treatment for these intangibles. This article examines the rules regarding the separate treatment of self-created customer-based intangibles and the situations in which separate treatment may be beneficial.
TAX PRACTICE MANAGEMENT
2025 tax software survey
AICPA members in tax practice assess how their return preparation software performed during tax season and offer insights into their procedures.
