The AICPA S Corporation Taxation Technical Resource Panel offers a summary of recent court decisions and IRS guidance.
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TOPICS / PASSTHROUGHS
S Corporation Income Taxation
Using qualified Subchapter S trusts (QSSTs)
The QSST may be useful for estate planning purposes and for holding S stock for the benefit of a minor or incompetent.
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.
Liability for payment of employment taxes when using a PEO
Chief Counsel Advice was issued regarding who is ultimately liable for payment of employment taxes when using a professional employment organization.
Tax Court allows full meal deduction for NHL team’s away games
Pregame meals provided to Boston Bruins players and personnel before away games qualify as a de minimis fringe benefit.
Allocating S corp. losses to acquiring and terminating shareholders
An S corporation’s election to use specific accounting can alter the allocation of passthrough items in some cases.
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.
Boston Bruins can deduct full cost of meals for team’s away games
The Tax Court held that the owners of the Boston Bruins could deduct the full cost of their team’s pregame meals for away games as a de minimis fringe benefit.
Losses disallowed where S corp. not indebted to shareholder
The Tax Court held that an S corporation shareholder could not claim losses from several wholly owned S corporations due to insufficient basis.
Tax Court upholds non-safe-harbor reverse like-kind exchange
The Tax Court’s decision in Estate of Bartell alleviates uncertainty about structuring
a reverse like-kind exchange intended to qualify for nonrecognition treatment.
S corporation owner-employees: Who controls income?
Clients who wish to have income from services be treated as income of their corporations should have revise independent contractor agreements so that payments are made to their corporations.
Ordinary loss deductions under Sec. 165(g)(3) in the S corp. context
This item discusses whether S corporations should be entitled to an ordinary loss under Sec. 165(g)(3) as a matter of law.
Disposing of passive activities
Disposing of property related to a passive activity does not resolve all matters related to the property.
Failure to Use S Corporation Correctly Results in Self-Employment Tax
Income earned by financial adviser was his, not the income of his wholly owned S corporation, and was therefore subject to self-employment tax.
Royalties on Pharmaceutical Technology Taxable as Ordinary Income, Tax Court Holds
Tax Court held that royalties received by an S corporation under a license agreement are taxable as ordinary income to the S corporation’s individual shareholder.
Avoiding Conversion to the Accrual Accounting Method by Electing S Status
A corporation may have to use the accrual
method if it is required to maintain inventory records.
Asset Acquisition Target Ineligible for Success-Based Fee Safe Harbor
Recent Chief Counsel Advice provides helpful insight to taxpayers planning or negotiating merger and
acquisition transactions.
Top 10 Easy Ways That Trusts Cause Loss of S Corporation Status
This item presents 10 ways that S corporations
can lose their S election status, most of them involving trusts.
Documenting Deductible Transaction Costs for Acquisitive Transactions
This item discusses the ability of a target in a Sec. 338(h)(10) transaction to use the safe-harbor election provided by Rev. Proc.
2011-29.
Ordinary Deduction for Worthless QSub Stock
Restructuring an existing QSub in an attempt to qualify for an ordinary deduction is prohibited and might result in an unfavorable deferral of loss.
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