S corporation redemptions: Navigating Secs. 302 and 301
This discussion sheds light on these questions with an overview of the applications of Secs. 302 and 301 to S corporation redemptions.
Gains & Losses
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.
3-year holding period applies to S corporations
The IRS announced that S corporations are subject to the new extended three-year holding period applicable to carried interests.
Longer carried interest holding period includes S corporations
The IRS announced that the new three-year holding period for carried interests applies to S corporations as well as partnerships.
Dispute between shareholders did not strip taxpayers of beneficial rights of ownership
The Tax Court held that the taxpayers’ poor relations with other shareholders of an S corporation did not affect their ownership interest in the corporation.
IRS will not acquiesce to ruling on non-safe-harbor reverse Sec. 1031 exchange
IRS announced it will not acquiesce to a Tax Court ruling in which it held that a taxpayer’s disposition and acquisition of property was not a self-exchange and qualified for Sec. 1031 nonrecognition treatment.
Lack of economic substance dooms loss deductions
A taxpayer was not entitled to a passthrough loss from the dissolution of an S corporation because the dissolution was part of a tax structure that did not have economic substance.
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.
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.
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.
Disposing of passive activities
Disposing of property related to a passive activity does not resolve all matters related to the property.
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.
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.
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.
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.
Current Developments in S Corporations
This article discusses major changes and developments that directly affect S corporations and their tax advisers during the period of this update (July 10, 2012–July 9, 2013).
IRS Not Allowed to Reclassify Passive Activity Income
The Tax Court held the IRS could not reclassify the taxpayer’s income from the rental of cellphone towers and the land they were situated on to his wholly owned S corporation as nonpassive income under the self-rental rule.
Current Developments in S Corporations
During the period of this S corporation tax update, some major changes that directly affect S corporations took place. This article also presents tax planning ideas for S corporations and their shareholders.
