The TCJA provides a way to avoid the unexpected termination of the S election when certain ESBT situations occur.
S Corporation Income Taxation
A tax court recently found that where an S corp. and affiliated entities were partially owned by a taxpayer, payment of the S corp.’s expenses by the affiliated entities did not increase the taxpayer’s debt basis in the S corporation.
A special relief provision allows unused losses caused by a lack of basis to be deducted by an S corporation shareholder under certain conditions for one year (or more) during the S corporation’s post-termination transition period.
Shareholders and their advisers should be prepared to verify the validity of the S election when the decision is made to begin marketing the company for sale.
The IRS ruled that a distribution to the sole shareholder of a C corporation was partly a recovery of the former S corporation’s accumulated adjustments account (AAA) and a taxable dividend for the remaining distribution.
The TCJA fundamentally relaxed the rules on S corporation ownership by allowing nonresident aliens to be potential current beneficiaries of ESBTs and, therefore, indirect corporation shareholders.
Revoking an S election may be the best course in some cases, but timely filing and shareholder consent are required.
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.
The IRS concluded that a taxpayer was not permitted to aggregate the S corporations with the partnership for the purpose of applying the at-risk rules of Sec. 465.
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.
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.
This article discusses who qualifies to take the credit, how to make the election, the calculation and allocation of the credit, and how to report it.
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.
A terminated S corporation may remain a cash-basis taxpayer if its average gross receipts for the three previous tax periods are less than $25 million.
This item discusses the many tax ramifications of converting.
Many factors must be considered when electing S status for a new corporation or converting an existing C corporation to ensure a timely election.
Regulations explicitly require elections to be made by the corporation, and shareholders themselves cannot change these elections.
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.
This discussion sheds light on these questions with an overview of the applications of Secs. 302 and 301 to S corporation redemptions.
An S corporation shareholder cannot unilaterally change an S corporation’s tax election in order to claim FICA tip credits.