Section 3 S Corporations Entity Tax Classification
|
|
- Louisa Garrett
- 6 years ago
- Views:
Transcription
1 Section 3 S Corporations Entity Tax Classification Business entities classification for tax purposes Check the box regulations Taxpaying entities Flow-through entities Corporations are C corporations unless they make a valid S election; needs 100% (unanimous) vote. Unincorporated entities taxed as partnerships if they have more than one owner taxed as sole proprietorships if owned by an individual or as disregarded entities if held by some other entity may elect to be taxed as C corporations
2 S Corporation Elections Formation 351 Qualification requirements (Small & Simple): Shareholders must be individuals (or certain estate or trusts for the benefit of individuals; no corp, partnerships or big trusts) Shareholder number: = or < 100; (residents or citizens; married couple is treated as a single shareholder; you, your grandfather & grandma (i.e., family members with a common ancestor = or < 6 generations plus their spouses) are one shareholder) Corporation type (must be domestic & eligible; financial institutions such as banks & insurance Cos not eligible) S corps can own C corps stock or qualified S Subs; C can t own S. 1 class of stock Filing the election: Election made within 1 st 2 ½ months of the beginning of the Corp s tax year is retroactively effective from the 1 st date of that tax year. Tax return, 1120-S, is due 3/15 with 6 month extension if calendar year. The IRS can treat a late-filed election as timely filed if it determines that reasonable cause existed.
3 S Corporation Election? Example: Suppose CCS was formed with Nicole Johnson, Sarah Walker, and Chan Inc., a corporation owned by Chan Armstrong, as shareholders. Would CCS be eligible to elect S corporation status? (No. Because one of its shareholders is a corporation (Chan Inc.), CCS would not be eligible to elect S corporation status) Suppose Nicole, Sarah, and Chance recruited 97 U.S. residents to become shareholders of CCS. Meanwhile, Nicole gave several of her CCS shares to her grandfather and his bride as a wedding gift. After the transfer, CCS had 102 shareholders. Can CCS elect S corporation status? Yes. Nicole (descendant of common ancestor), her grandfather (common ancestor), and her grandfather s wife (spouse of common ancestor) are treated as one shareholder for purposes of the 100-shareholder limit
4 Formation Similar to a C Corp Cash or property may be transferred to a S corp. in exchange for the firm s stock at any time. Control: if immediately after transfer, the transferor gain 80% or more of stock (voting or nonvoting stock = or > 80%), it is tax free exchange, ie., the transaction is non-taxable and will not have to recognize any gain when property is transferred. Services rendered for stock or < 80%: taxable (ordinary income) at FMV
5 S Corporation Operation Initial contribution +/- % income/loss - Distrib received = Net basis (basis) muni bond inter Separately stated items $10 6 (=60 NI x 10% owned) (7) partially 9 taxed when earned taxed already because taxed when earned, not when received 1,550* 1,556 * Allocate your income on average daily basis, meaning how many stocks you owned on a daily basis (5/100 for 31 days). e.g., An S corp has 100 shares outstanding and has $365,000 NI. You purchased 5 shares on 11/30 (31 days). $365,000 / 365 days = $1,000 avg NI / 100 shares = $10 per share per day x31 days = 10 x 5 shares x 31 days = 1,550 NI allocated to you, which increase your basis.
6 Separately Stated Items 1/4 Items subject to certain limitations on shareholder s individual return, i.e., will go over to individual return separately. S Corp doesn t pay income taxes, but files info returns(1120-s) reporting income & telling how that income is allocated to the various shareholders. Shareholders must separately state items to allow any special treatment on individual tax returns to be applied. Corporate: prepares Schedule K summarizing the ordinary income. also prepares Sch K-1 for each shareholder showing that shareholder s allocated share of items on Sch K. These items include: Capital gains & losses (see Sec 2, slide 15) Deductibility limit (3,000 NL) Section 1231 gains & losses Noncurrent bus assets; Gaincap, Loss- Ordinary Dividends & interest Investment Interest- Net out income/exp Passive activities (Pub 925) <25,000 Charitable contributions Must itemize to deduct/50% AGI Section 179 depreciation $ limit, must elect per yr Tax credits (see Sec 2, slide 19 ) Limit to tax liab
7 Separately Stated Items 2/4
8 Separately Stated Items, example 3/4 Your individual return already has $2,490 cap loss. You now have $1,000 capital loss distribution from an S Co. (2,490) (1,000) (3,490) 3,000 cap loss limitation 490 carry over indefinitely
9 Schedule K and Schedule K-1, 4/4 Example S Corp (Sch K) Sch K-1 Corp Level Items Sales 200 COGS (1125-A) (60) Rent (25) G&A ( 5) Sal (comp) (10) 10 Sch E Sep Items Interest Income ( 0) B Charity (30) 3 A Cap Loss (10) 1 D Net Income 60 (6 = 10%) 6 Distribution to shareholder: See slide 5 ( = 9 shareholder s net basis)
10 Limit on Investment Interest Deduction Generally, your deduction for investment interest expense is limited to your net investment income. You can carry over the amount of investment interest you could not deduct because of this limit to the next tax year. The interest carried over is treated as investment interest paid or accrued in that next year.
11 Operating Distributions 1/3 S Corporations with AAA, E & P and AEP Distributions come from (1) Accumulated Adjustments Account (AAA; money earned as an S Corp but not paid out; not taxable), (2) E & P (current; dividend; taxable), and then (3) AEP (taxable) (4) any remaining shareholder stock basis (not taxable) AAA represents the current cumulative balance of the S corp. Total distributions to shareholders > (1)+(2)+(3), excess is capital gain
12 Operating Distributions 2/3 AAA account calculation Beginning of year AAA balance + Separately stated income/gain items (excluding tax exempt income) + Ordinary income - Separately stated losses and deductions - Ordinary losses - Nondeductible expenses that are not capital expenditures (except deductions related to generating tax-exempt income) - Distributions out of AAA = End of year AAA balance AAA may have a negative balance but distributions may not cause the AAA to go negative or become more negative
13 Accumulated Earnings & Profits (AEP; for C Corp) 3/3 C Corp (AEP) S Corp (AAA) earned, not paid Taxed when earned; no taxes to shareholders when S Corp pays: 1 st : comes out of AAA not taxed to SH 2 nd : extra goes against AEP 3 rd : if pay out > 1 + 2, the extra is a basis reduction (not taxable)
14 Operating Distributions Before considering distributions, CCS s AAA was $24,000 and its accumulated E&P from 2012 was $40,000. Also assume Nicole s basis in her CCS stock is $80,000. If CCS distributes $60,000 on July 1 ($20,000 to each shareholder), what is the amount and character Nicole (a 1/3 shareholder) must recognize on her $20,000 distribution, and what is her stock basis in CCS after the distribution?
15 S Corp Termination 1/2 The election to be an S corp must be unanimously (100%) Voluntary Terminations - Elected by shareholders, = or > 50% stock Effective date Involuntary Terminations (S status revoked) Failing S corporation requirements (no longer small & simple), e.g., issued > 100 shares, issued pref stocks, or nonresident SH Passive investment income (dividends, interests, royalties) > 25 percent of gross receipts for 3 years Restricted to S corporations with earnings and profits Passive investment income; Gross receipts Effective date
16 S Corp Termination 2/2 Short tax years Allocation of income across S and C corporation years. Daily method (see slide 19) Specific identification method Tax return due dates S corporation reelections Generally available at the beginning of the 5 th year after year of termination (i.e., Termin, yr1, 2, 3, 4, 1/1/5) Early IRS consent
17 Income and loss allocations 1/2 Allocate profit and loss pro rata, based on shares owned each day of the year If sell shares during the year, pro rata, per day allocations If all shareholders with changing ownership percentages agree, the S corporation can use its normal accounting rules to allocate income and loss to the specific periods in which it realized income and losses
18 Income and Loss Allocations 2/2 - Daily Method Assume CCS was formed as a calendar-year S corporation with Nicole Johnson, Sarah Walker, and Chance Armstrong as equal (one-third) shareholders (has 100 shares outstanding). On 6/14/2013, Chance sold his CCS shares to Nicole. CCS reported business income for 2013 as follows: January 1 through June 14 (165 days) $100,000 June 14 through December 31 (200 days) 265,000 January 1 through December 31, 2013 (365 days) $365,000 How much 2013 income is allocated to each shareholder if CCS uses the daily method of allocating income? Nicole = 188,333=100,000/100*200/ ,000/3 Sarah = 121,667 = 365,000 x 1/3 Chance = 55,000=100,000/100 x (165/3)
19 Built-in Gains (BIG) A C corp elects S corp status; and the FMV of the corp assets > the adjusted basis of corp assets on the election date. The difference (i.e., appreciated amount) is a net unrealized built-in gain. A distribution or sale of an S corp s assets in 5 years* (counting from the beginning of the year of which S corp status is elected) may result in a tax on any built-in gain at the corp-level. Calculation of Tax: 35% (the highest corp tax rate) X net gain recognized. In summary, recognized built-in gain for the current year (the year assets are sold or distributed) is subject to 35% on net gain recognized (up to the amount of BIG gain on conversion). *Note: before 2009, it was 10 years , 7 years; 2011: 5 years The excess of a corporation s net recognized built-in gain in excess of its taxable income: is treated as recognized built-in gain in the succeeding tax year subject to that succeeding year s limitations. If the succeeding year is a year after the recognition period has expired, the gain escapes the BIG tax.
20 LIFO Recapture Tax A C corp that owns LIFO inventory and that elects to be taxed as an S corp must include in its gross income for its final tax year as a C corp the LIFO recapture amount which is the excess of the FIFO inventory value over the LIFO inventory at the close of the last tax year of C corp status. Basis of the inventory is increased by the amount on which the recapture tax is imposed. The recapture income is spread over 4 years: the last C corp year and the first 3 years of the S corp.
21 Shareholder s Basis Initial basis: Exchange: Tax basis of property transferred, less any liabilities assumed by the corporation on the property contributed (substituted basis) Increased by any gain recognized; Reduced by the fair market value of any property received other than stock Purchase: Purchase price of the stock
22 Shareholder s Basis Annual basis adjustments: Increase for: Contributions Shareholder s share of income/gain items (including tax-exempt income Decrease for: Distributions Shareholder s share of nondeductible expenses Shareholder s share of expense/loss items Basis can never be < 0
23 Shareholder s Basis Example Assume that Nicole s beginning of year basis in CCS is $115,000. This year, her allocated share of S corporation items are: $80,000 business income; $2,000 interest income; $1,000 dividends; $400 tax-exempt interest income. What is Nicole s basis at the end of 2013?
24 Loss Limitations - Summary Losses are limited to amount invested & amount loaned to the Corp. (i.e., amount at risk). Shareholder s basis in their stock is decreased by: their share of losses (including non-deductable expenses) dividends received (all dividends are treated as return of capital; not taxable, it was taxed when earned) Basis can t go below 0, if below 0, loss is suspended & carry over until more money is put in or there is a profit (gain). (note: municipal bond interest received increases basis, but not taxable)
25 Loss Limitations - Details Tax Basis Limitation: Losses limited first to the shareholder s tax basis in stock shares and then to any basis in any direct loans made to their S corporations. In subsequent years, any net increase in basis for the year first restores the shareholder s debt basis and then the shareholder s stock basis Any loan repayment in excess of the shareholder s debt basis triggers a taxable gain to the shareholder
26 Loss Limitations Details Tax Basis Limitation (cont d): Losses not deductible due to the tax basis limitation are suspended until the shareholder generates additional basis If the shareholder sells the stock before creating additional basis, the suspended loss disappears unused At risk Limitation shareholders may deduct S corporation losses only to the extent of their at-risk amount ( 465)
27 Loss Limitations - Details At risk Limitation (cont d): S corporation shareholders are deemed at risk only for direct loans they make to S corporations S corporation shareholder s at-risk amount is generally the same as stock basis Losses limited under the at-risk rules are carried forward indefinitely until the shareholder generates additional at-risk amounts to utilize them or sells the S corporation stock
28 Loss limitations- Examples Suppose at the beginning of 2014, Nicole s basis in her CCS stock was $14,000. During 2014, Nicole loaned $8,000 to CCS and CCS reported a $60,000 ordinary business loss and no separately stated items. How much of the $20,000 ordinary loss allocated to Nicole clears the tax basis hurdle for deductibility in 2014? All $20,000. The first $14,000 of the loss reduces her stock basis to $0, and the remaining $6,000 reduces her debt basis to $2,000 ($8,000 $6,000). Suppose in 2015, CCS allocated $9,000 of ordinary business income to Nicole and no separately stated items. What are Nicole s CCS stock basis and debt basis at the end of 2015? Her stock basis is $3,000; her debt basis is $8,000. The income first restores debt basis to its original amount and then increases her stock basis.
29 Self-Employment Income S corporation shareholder s allocable share of ordinary business income (loss) is not classified as selfemployment income Shareholder salary as employees is subject to social security taxes Tax planning incentives
30 Fringe Benefits For shareholder who owns 2 percent or less of the S corporation, the S corporation gets a tax deduction and the benefit is nontaxable to shareholder-employee For shareholder who owns > 2 percent of the S corporation on any day during its tax year is not considered an employee entitled to employee benefits, the S corporation gets a tax deduction but many benefits are taxable to the shareholder-employee
31 Property Distributions S corporation consequences: recognizes gain on distribution of appreciated property does not recognize loss on distribution of property whose value has declined Shareholder consequences: recognizes distributive share of the deemed gain and increase stock basis accordingly the property distribution is the FMV of the property received taxability of distribution is determined based on distribution rules discussed previously basis is FMV of property
32 Liquidating Distributions S corporation rules follow C corporation rules S corporations generally recognize gain or loss on each asset they distribute in liquidation These gains and losses are allocated to the S corporation shareholders, increasing or decreasing their stock basis In general, shareholders recognize gain on the distribution if the value of the property exceeds their stock basis; they recognize loss if their stock basis exceeds the value of the property
33 S Corporation Taxes Excess net passive income tax Only applies to S corporations with C corporation E&P Levied on excess net passive income calculated as: Net Passive Income x [(Passive Investment Income (25% x Gross Receipts)) / Passive Investment Income] Limit on excess net passive income Applicable tax rate Allocation of excess net passive income tax to shareholders S corporation termination if tax applies three consecutive years
34 Estimated Taxes & Filing Requirements Estimated taxes Generally follow C corporation rules: S corporations with a federal income tax liability of $500 or more due must make quarterly estimated tax payments Not required to make estimated tax payments for the LIFO recapture tax Filing requirements Form 1120S due by the 15th day of the third month after the S corporation s year end Automatic, six-month extension by filing Form 7004
35 Comparing C and S Corporations and Partnerships
36 Comparing C and S Corporations and Partnerships
37 Comparing C and S Corporations and Partnerships
38 Comparing C and S Corporations and Partnerships
39 Comparing C and S Corporations and Partnerships
STRUCTURE. Schedule K consists of Sales COGS Rent G&A Salary Charity Capital Loss Net Income
SCORP STRUCTURE Operation and Separately stated items Distributions to shareholders AAA Account Health insurance premiums S Status Termination Built in gains tax Schedule K consists of Sales COGS Rent
More informationBusiness Entities GENERAL PARTNERSHIP
Business Entities General Entity Tax Characteristics and Executive Benefits Using Life Insurance LIABILITY EASE OF FORMATION State law requirements for incorporation must be met. Implementation expenses
More informationBusiness Entities GENERAL PARTNERSHIP
THE PRUDENTIAL INSURANCE OF AMERICA Business Entities General Entity Tax Characteristics and Executive Benefits Using Life Insurance LIABILITY EASE OF FORMATION State law requirements for incorporation
More informationS Corporations A Complete Guide
S Corporations A Complete Guide Edward K Zollars Phoenix, Arizona S Corporations A Complete Guide PARTNERSHIPS VS S CORPORATIONS 1 Comparison Background Formation of the Entity Basis Rules Ownership Taxable
More informationChoice of Entity. 69 th Annual Program of the West Virginia Tax Institute October 28-30, 2018 Marriott Morgantown Morgantown, West Virginia
Choice of Entity 69 th Annual Program of the West Virginia Tax Institute October 28-30, 2018 Marriott Morgantown Morgantown, West Virginia John F. Allevato Spilman Thomas & Battle, PLLC 300 Kanawha Boulevard,
More informationU.S. Income Tax Return for an S Corporation
Form 1120S U.S. Income Tax Return for an S Corporation Do not file this form unless the corporation has filed or is attaching Form 2553 to elect to be an S corporation. Go to www.irs.gov/form1120s for
More informationChapter 15 Taxation of S Corporations
Chapter 15 Taxation of S Corporations "Tax Option" corporations/subchapter S. Fundamental inquiry: Should the corporation (as an entity) be subject to any federal income tax? Alternatively, should the
More informationForm 1120-S Corporation Issues
Michigan Society of Enrolled Agents MiSEA Presents Form 1120-S Corporation Issues at the Bavarian Inn Lodge and Conference Center One Covered Bridge Lane Frankenmuth, Michigan on November 13, 2017 Course
More informationPage What s New. Type Here S-Corporation Taxes at the Entity Level 1
Page 257-272 What s New Type Here 13 - S-Corporation Taxes at the Entity Level 1 The PATH Act: A. Permanently limited the recognition period for the BIG to 5 years. B. Temporarily extended the recognition
More informationCHOICE OF BUSINESS ENTITY: PRESENT LAW AND DATA RELATING TO C CORPORATIONS, PARTNERSHIPS, AND S CORPORATIONS
CHOICE OF BUSINESS ENTITY: PRESENT LAW AND DATA RELATING TO C CORPORATIONS, PARTNERSHIPS, AND S CORPORATIONS Prepared by the Staff of the JOINT COMMITTEE ON TAXATION April 10, 2015 JCX-71-15 CONTENTS INTRODUCTION...
More informationFEDERAL INCOME TAX CONSIDERATIONS IN ACQUISITIONS AND DISPOSITIONS OF S CORPORATIONS
FEDERAL INCOME TAX CONSIDERATIONS IN ACQUISITIONS AND DISPOSITIONS OF S CORPORATIONS The University of Texas School of Law 60 th Annual Taxation Conference Timothy J. Devetski Lina G. Dimachkieh Vinson
More informationCHAPTER 10 COMPARATIVE FORMS OF DOING BUSINESS LECTURE NOTES
CHAPTER 10 COMPARATIVE FORMS OF DOING BUSINESS 10.1 FORMS OF DOING BUSINESS LECTURE NOTES 1. Legal Forms. Business entities can be organized into the following principal legal forms. Sole proprietorship.
More informationWeighted average. Owned 0 on January 1, bought 50% from James on May Norma Shipper Owned all year 100
Case Study Corntax Inc Using 2017 Forms adapted for 2017 tax laws.., had three shareholders in 2018 Weighted average James Robertson Owned 50% on January 1, sold to John on May 26 40 John Bouchet Owned
More informationComparison of Entity Choices
Comparison of Entity Choices The following table illustrates the major differences in operating a business as a C corporation, S corporation, partnership,, or sole proprietorship. PPC's Tax Planning Guide
More information2018 VERMONT TAX SEMINAR NAVIGATING CHOICE OF ENTITY IN THE WAKE OF TCJA
2018 VERMONT TAX SEMINAR NAVIGATING CHOICE OF ENTITY IN THE WAKE OF TCJA EXAMPLES #1-4 Steve Trenholm, CPA, MST Gallagher, Flynn & Company, LLP {B1929672.1} Example #1 Specified Service Business: Taxable
More informationShareholder's Instructions for Schedule K-1 (Form 1120S)
2017 Shareholder's Instructions for Schedule K-1 (Form 1120S) Shareholder's Share of Income, Deductions, Credits, etc. (For Shareholder's Use Only) Department of the Treasury Internal Revenue Service Section
More informationPartner's Instructions for Schedule K-1 (Form 1065)
2018 Partner's Instructions for Schedule K-1 (Form 1065) Partner's Share of Income, Deductions, Credits, etc. (For Partner's Use Only) Department of the Treasury Internal Revenue Service Section references
More informationThe Administration's Tax Reform Targets -- Selected Issues
College of William & Mary Law School William & Mary Law School Scholarship Repository William & Mary Annual Tax Conference Conferences, Events, and Lectures 2015 The Administration's Tax Reform Targets
More information2011 Partner s Instructions for Schedule K-1 (Form 1065) Partner s Share of Income, Deductions, Credits, etc.
2011 Partner s Instructions for Schedule K-1 (Form 1065) Partner s Share of Income, Deductions, Credits, etc. (For Partner s Use Only) Department of the Treasury Internal Revenue Service Section references
More informationChoice of Entity. Danny Santucci
Choice of Entity Danny Santucci Table of Contents Chapter 1 Sole Proprietorship... 1 Learning Objectives... 1 Introduction... 1 Advantages... 1 Disadvantages... 1 Formation... 1 Start-Up Expenses... 2
More informationS CORPORATIONS - AN INCREDIBLE PLANNING TOOL
AUGUST 2004 S CORPORATIONS - AN INCREDIBLE PLANNING TOOL One of the most important of all business entities is the S (a/k/a subchapter S) corporation. This commentary will explain why this type of entity
More information*Brackets adjusted for inflation in future years Long Term Capital Gains & Dividends Taxable income up to $413,200/$457,600 0% - 15%*
Income Tax Planning Overview The American Taxpayer Relief Act of 2012 extended prior law for certain income tax rates; however, it also increased income tax rates on upper income earners. Specifically,
More informationCorporate Formations and Capital Structure
Learning Objectives Chapter C:2 Corporate Formations and Capital Structure After studying this chapter, the student should be able to: 1. Explain the tax advantages and disadvantages of using each of the
More informationCorporate Tax Segment 3 Corporate Formation
Corporate Tax Segment 3 Corporate Formation University of Leiden International Tax Center May 2007 Professor William P. Streng University of Houston Law Center 4/30/2007 (c) William P. Streng 1 Formation
More informationTax reform and the choice of business entity
The Adviser s Guide to Financial and Estate Planning: Tax reform and the choice of business entity Presented by: Steven G. Siegel, JD, LLM About the PFP Section & PFS Credential The AICPA Personal Financial
More informationCPA EXAM: REGULATION GET MORE POINTS AND PASS THE EXAM!
CPA EXAM: REGULATION GET MORE POINTS AND PASS THE EXAM! CPA EXAM: REGULATION GET MORE POINTS AND PASS THE EXAM! REG: C-CORP ANOTHER QUALITY BOOK FROM CPA-PLANET This book is for anyone studying for the
More informationBasis Issues for Partnerships and S Corporations. Edward K. Zollars, CPA
Basis Issues for Partnerships and S Corporations Edward K. Zollars, CPA www.cperesources.com ed@tzlcpas.com Importance of Basis One of three limits on deducting a loss Required attachment to tax return
More informationPartner's Instructions for Schedule K-1 (Form 1065)
2017 Partner's Instructions for Schedule K-1 (Form 1065) Partner's Share of Income, Deductions, Credits, etc. (For Partner's Use Only) Department of the Treasury Internal Revenue Service Section references
More informationSole Proprietorship Limited Liability Co. (LLC) C-Corp S-Corp Fairly Easy Fairly Easy Fairly Easy Moderately Difficult
Estimated Ease of Formation Fairly Easy Fairly Easy Fairly Easy Moderately Difficult Formation Procedure Key Documents for Formation No Filing Required -DBA Filing (Give the business a name other than
More information97 Partner's Instructions for Schedule K-1 (Form 1065)
97 Department Partner's Instructions for Schedule K-1 (Form 1065) Partner's Share of Income, Credits, Deductions, etc. (For Partner's Use Only) Section references are to the Internal Revenue Code unless
More informationChapter 16. Corporations: Introduction, Operating Rules, and Related Corporations
Chapter 16 Corporations: Introduction, Operating Rules, and Related Corporations Eugene Willis, William H. Hoffman, Jr., David M. Maloney and William A. Raabe Copyright 2004 South-Western/Thomson Learning
More informationU.S. Income Tax Return for an S Corporation
Form Department of the Treasury Internal Revenue Service () Paid Preparer Use Only Caution: Include only trade or business income and expenses on lines 1a through 21. See the instructions for more information.
More informationForm 1120S Challenges for Tax Preparers
Form 1120S Challenges for Tax Preparers Navigating Computations-to-Adjustments Accounts and Determining Treatment of Dividends, Distributions and Fringe Benefits WEDNESDAY, DECEMBER 10, 2014, 1:00-2:50
More information97 Shareholder's Instructions for Schedule K-1 (Form 1120S)
97 Department Shareholder's Instructions for Schedule K-1 (Form 1120S) Shareholder's Share of Income, Credits, Deductions, etc. (For Shareholder's Use Only) Section references are to the Internal Revenue
More information2014 S CORPORATION TAXATION PART II Recommended CPE Credit: 6 HRS [B] PREPARED BY. CPElite T.M. In a Class By Yourself T.M.
2014 S CORPORATION TAXATION PART II Recommended CPE Credit: 6 HRS [B] PREPARED BY CPElite T.M. In a Class By Yourself T.M. (800) 9500-CPE P.O. BOX 1059, CLEMSON, SC 29633-1059 & P.O. BOX 721, WHITE ROCK,
More informationDay 1 October 21, 2015:
BUSINESS PLANNING WITH S CORPS, PART 1 & PART 2 First Run Broadcast: October 21 & 22, 2015 1:00 p.m. E.T./12:00 p.m. C.T./11:00 a.m. M.T./10:00 a.m. P.T. (60 minutes each day) This program will provide
More informationU.S. Income Tax Return for an S Corporation
Form Sign Here 1120S Department of the Treasury Internal Revenue Service Paid Preparer Use Only U.S. Income Tax Return for an S Corporation Do not file this form unless the corporation has filed or is
More informationDistributions. 9/30/2011 (c) William P. Streng 1
Chapter 4 Nonliquidating Distributions Dividends - i.e., operating distributions IRC 301(a) - Subchapter C, Part A. Alternative dividend classification systems: 1) Federal income tax income tax; e&p 2)
More information2) S corporations are flow-through entities in which S income is allocated to shareholders. Answer: TRUE Page Ref.: C:2-6 Objective: 1
Pearson's Federal Taxation 2017: Corp., 30e (Anderson) Chapter C2: Corporate Formations and Capital Structure LO1: Organizational Forms Available 1) A sole proprietor is required to use the same reporting
More informationDistributions. 9/28/2012 (c) William P. Streng 1
Chapter 4 Nonliquidating Distributions Dividends - i.e., operating distributions See IRC 301(a) - Subchapter C, Part A. Alternative dividend classification systems: 1) Federal income tax income tax; e&p
More informationS CORPORATION UPDATE By Sydney S. Traum, BBA, JD, LLM, CPA all rights reserved by author.
2007-2008 S CORPORATION UPDATE By Sydney S. Traum, BBA, JD, LLM, CPA all rights reserved by author. Portions of this article are adapted from material written by the author for Aspen Publishers loose-leaf
More informationThe Impact of U.S. Tax Reform on International Private Clients and Their Foreign Trusts
The Impact of U.S. Tax Reform on International Private Clients and Their Trusts Hal J. Webb: Partner Head of International Private Client Services STEP Cayman April 19, 2018 1 Gift and Estate Tax Exemption
More informationGeneration-Skipping Transfer Tax: Planning Considerations for 2018 and Beyond
Generation-Skipping Transfer Tax: Planning Considerations for 2018 and Beyond The Florida Bar Real Property Probate and Trust Law Section 2018 Wills, Trusts & Estates Certification and Practice Review
More information2016 S CORPORATION TAXATION PART II Recommended CPE Credit: 6 HRS [B] PREPARED BY. CPElite T.M. In a Class By Yourself T.M.
2016 S CORPORATION TAXATION PART II Recommended CPE Credit: 6 HRS [B] PREPARED BY CPElite T.M. In a Class By Yourself T.M. (800) 9500-CPE P.O. BOX 1059, CLEMSON, SC 29633-1059 & P.O. BOX 721, WHITE ROCK,
More informationTax Guide For Minnesota Businesses
Tax Guide For Minnesota Businesses 2017-2018 TAX GUIDE FOR MINNESOTA BUSINESSES Olsen Thielen & Co., Ltd. Certified Public Accountants & Consultants 2675 Long Lake Road 300 Prairie Center Drive #300 Roseville,
More informationDistributions. 10/1/13 (c) William P. Streng 1
Chapter 4 Nonliquidating Distributions Dividends - i.e., operating distributions See IRC 301(a) - Subchapter C, Part A. Alternative dividend classification systems: 1) Federal income tax income tax; &
More informationU.S. Income Tax Return for an S Corporation. OMB No Form 1120S. Do not file this form unless the corporation has filed or is
U.S. Income Tax Return for an S Corporation OMB No. 1545-0130 Form 1120S Do not file this form unless the corporation has filed or is Department of the Treasury attaching Form 2553 to elect to be an S
More informationItems to Note. Number of Assets - The conversion program converts a maximum of 2,500 assets per client file.
Items to Note The main purpose of this conversion is to get your data ready for the following tax year. Therefore, viewing a Form 1040 or business equivalent form will not display the same results that
More informationChapter Two - Formation of a Corporation
Chapter Two - Formation of a Corporation Fundamental income tax elements: 1) Transferor: 351(a) - nonrecognition treatment applicable to the asset transferor (if certain conditions are met); otherwise:
More informationC Corporation S Corporation LLC. and LLLP. Legal Entity? Same entity as owner Separate entity from owner. Taxed separate from Owner
Legal Entity? Same entity as owner Separate entity from owner Taxed separate from Owner Separate entity from owner, unless piercing or reverse piercing applies Separate entity from owner, unless piercing
More informationPearson s Federal Taxation Corporations, Partnerships, Estates & Trusts (2019 edition) Textbook Updates
Pearson s Federal Taxation Corporations, Partnerships, Estates & Trusts (2019 edition) Textbook Updates Several chapters Rev. Proc. 2018-57 Notice 2018-83 Chapter 1 Tax Research Page 32 Table of Updates
More informationTaxation Of Corporations C-Corporation And S-Corporation
Taxation Of Corporations C-Corporation And S-Corporation By Haik Chilingaryan, JD There are generally two ways corporations may be taxed under the federal rules. By default, a corporation is taxed under
More information2018 Year-End Tax Planning Tips
2018 Year-End Tax Planning Tips It s Never Too Early to Start Planning As the end of another year approaches, it s time to start thinking about ideas which may help lower your tax bill. When discussing
More informationU.S. Income Tax Return for an S Corporation. 2 Cost of goods sold (attach Form 1125-A)...
Form 1120S U.S. Income Tax Return for an S Corporation OMB No. 1545-0123 G Do not file this form unless the corporation has filed or is attaching Form 2553 to elect to be an S corporation. G Go to www.irs.gov/form1120s
More informationChapter Money Education 13-1
Chapter 13 Nontaxable transaction Realized gain/loss not currently recognized Recognition is postponed to a future date Basis, potential depreciation recapture, and holding period carry over Tax-free transaction
More informationPresident Obama's 2016 Federal Budget Proposal
President Obama's 2016 Federal Budget Proposal March 10, 2015 by Tim Steffen On the heels of his first State of the Union address to the nation after the mid-term elections, President Obama released his
More informationINCOME TAX CONSIDERATIONS FOR 2014 INCOME TAX RETURNS
INCOME TAX CONSIDERATIONS FOR 2014 INCOME TAX RETURNS Following are income tax items that could affect your return for 2014. Please review and make sure you have alerted your tax consultant for all of
More informationShareholder s Share of Income, Deductions, Credits, etc.
Schedule K-1 (Form 1120S) Department of the Treasury Internal Revenue Service 2010 For calendar year 2010, or tax year beginning, 2010 ending, 20 Shareholder s Share of Income, Deductions, Credits, etc.
More information*Brackets adjusted for inflation in future years.
Income Tax Planning Overview The American Taxpayer Relief Act of 2012 extended prior law for certain income tax rates; however, it also increased income tax rates on upper income earners. Specifically,
More informationHow Tax Reforms Impacts Your Vineyard February 8, Presented by: Kathy Freshwater, CPA Craig Anderson, CPA
How Tax Reforms Impacts Your Vineyard February 8, 2018 Presented by: Kathy Freshwater, CPA Craig Anderson, CPA Presenters Kathy Freshwater Tax Senior Manager Yakima Craig Anderson Tax Partner Yakima High
More information2) S corporations are flow-through entities in which S income is allocated to shareholders. Answer: TRUE Page Ref.: C:2-6 Objective: 1
Prentice Hall's Federal Taxation 2013 Corporations, 26e (Pope) Chapter C2 Corporate Formations and Capital Structure 1) A sole proprietor is required to use the same reporting period for both business
More informationChapter Six (1) Stock Dividends & (2) 306 Stock
Chapter Six (1) Stock Dividends & (2) 306 Stock A stock dividend is defined as: A distribution by the issuer corporation of its own stock to its shareholders. Alternative types of dividend distributions:
More informationDRAFT AS OF August 7, 2013
Form 8960 Department of the Treasury Internal Revenue Service (99) Name(s) shown on Form 1040 or Form 1041 Net Investment Income Tax Individuals, Estates, and Trusts Attach to Form 1040 or Form 1041. Information
More informationUpdates for the American Taxpayer Relief Act of 2012
Quickfinder Small Business Quickfinder Handbook (2012 Tax Year) Updates for the American Taxpayer Relief Act of 2012 Instructions: This packet contains marked up changes to the pages in the Small Business
More informationChapter 24. Taxation of International Transactions. Eugene Willis, William H. Hoffman, Jr., David M. Maloney and William A. Raabe
Chapter 24 Taxation of International Transactions Eugene Willis, William H. Hoffman, Jr., David M. Maloney and William A. Raabe Copyright 2004 South-Western/Thomson Learning Overview Of International Taxation
More informationGeneral Rule Capital Gain or Loss. Sec Example 12-1 Sale. General rule: a sale by a partner generates capital gain or loss.
General Rule Capital Gain or Loss Sec. 741 12-3 1 General rule: a sale by a partner generates capital gain or loss. Exception for seller s share of partnership hot asset gains or losses. Same for: Sale
More informationChapter 4. Corporations: Earnings & Profits and Dividend Distributions. Corporations, Partnerships, Estates & Trusts
Chapter 4 Corporations: Earnings & Profits and Dividend Distributions Corporations, Partnerships, Estates & Trusts 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated,
More informationACTIVE TRADE OR BUSINESS INCOME REDUCED RATE COMPUTATION (Complete one I-335 for each return) 1a. Enter amount from Worksheet 1, line a. $.
1350 STATE OF SOUTH CAROLINA DEPARTMENT OF REVENUE I-335 (Rev. 8/2/10) ACTIVE TRADE OR BUSINESS INCOME REDUCED RATE COMPUTATION (Complete one I-335 for each return) 3410 (Attach I-335 and all supporting
More informationYear-End Tax Planning Summary December 2015
Year-End Tax Planning Summary December 2015 Overview Thanks to the continued political gridlock in Washington, 2015 did not see comprehensive tax reform. However, on December 18th, Congress passed the
More informationOverview of the Tax Structure
Overview of the Tax Structure 2007, CCH INCORPORATED 4025 West Peterson Ave. Chicago, IL 60646-6085 http://www.cch.com 1 of 35 3 of 35 Responsibilities of Taxpayers Prepare appropriate tax forms and schedules
More informationBankruptcy Questions Answered!
Bankruptcy Questions Answered! by ROBERT E. McKENZIE, EA, ATTORNEY 2017 ARNSTEIN & LEHR SUITE 1200 120 SOUTH RIVERSIDE PLAZA CHICAGO, ILLINOIS 60606 (312) 876-7100 REMCKENZIE@ARNSTEIN.COM http://www.mckenzielaw.com
More informationCapital Asset Taxation Introduction
Capital Asset Taxation Introduction Ordinary income tax rates range from 10% to 39.6% Capital gain tax rates are much lower Usually 0% or 15% rate Could be 20% rate for very high incomes NTTC Training
More informationDistributions. 9/22/2016 (c) William P. Streng 1
Chapter 4 Nonliquidating Distributions Dividends - i.e., operating distributions. See IRC 301(a) - Subchapter C, Part A. Alternative dividend classification systems: 1) Federal income tax (a) income tax;
More informationSale or Exchange of a Partnership Interest
5 Sale or Exchange of a Partnership Interest 1 General rule: a sale by a partner generates capital gain or loss. Exception for seller s share of partnership hot asset gains or losses (sec. 751(a)) 2 Amount
More informationAcc. 433, Chapter Outline for use with Prentice Hall's Federal Taxation Corporations Richard B. Malamud, last updates, in part, November, 2011
Acc. 433, Chapter Outline for use with Prentice Hall's Federal Taxation Corporations Richard B. Malamud, last updates, in part, November, 2011 1) Chapter 1 was not assigned! 2) Formation and Capital Structure
More informationDon t Let 2018 Be Taxing:
Don t Let 2018 Be Taxing: How Changes to the Tax Laws Change How We Counsel Businesses March 15, 2018 Agenda Introduction C corporation overview Pass-through overview Comparison 2 Introduction Types of
More informationA PATH To Understanding Federal Tax: A 2016 Update of Federal Tax Laws
A PATH To Understanding Federal Tax: A 2016 Update of Federal Tax Laws berrydunn.com PATH Act Permanent Extensions for Individuals State & Local Sales Tax Deduction Charitable Distributions from IRA s
More informationUnderstanding Legal Organization Structures
Understanding Legal Organization Structures Presented by Lisa A. Waligorski, CLM FM33 5/5/2018 3:00 PM The handout(s) and presentation(s) attached are copyright and trademark protected and provided for
More informationForm 1120S Challenges for Tax Preparers
Form 1120S Challenges for Tax Preparers Navigating Computations-to-Adjustments Accounts and Treatment of Dividends, Distributions and Fringe Benefits TUESDAY, FEBRUARY 5, 2013, 1:00-2:50 pm Eastern IMPORTANT
More informationTangible Property Regulations and Tax Update for the Oil and Gas Industry
and Tax Update for the Oil and Gas Industry Laura Roman, CPA, CMAP Partner, Tax and Strategic Business Services 0 Repair Regulations Affect almost all taxpayers Govern capitalizing and deducting expenditures
More informationChapter 3 Business Income & Expenses Part I
Chapter 3 Business Income & Expenses Part I Income Tax Fundamentals 2011 Gerald E. Whittenburg Martha Altus-Buller Learning Objectives Apply tax rules for rental and vacation properties Explain treatment
More information2010 Internal Revenue Service
Sign Here Paid Preparer Use Only U.S. Income Tax Return for an S Corporation Do not file this form unless the corporation has filed or is OMB No. 545-3 Form 2S attaching Form 2553 to elect to be an S corporation.
More informationPurchase and Sale of Interests; Asset and Stock Acquisitions; Redemptions; and Terminations in Pass-Through Entities
College of William & Mary Law School William & Mary Law School Scholarship Repository William & Mary Annual Tax Conference Conferences, Events, and Lectures 1994 Purchase and Sale of Interests; Asset and
More informationCapital Gain or Loss. Introduction. Capital Asset Taxation. Introduction. Capital Asset Taxation. What is a Capital Asset
Introduction Capital Gain or Loss Form 1040 Line 13 Pub 4012 Tab D Pub 4491 Part 3 Lesson 11 What is a capital gain? It s the taxpayer s profit when they sell a capital asset for more than they have in
More informationRIA Special Study: Business Tax Provisions Retroactively Extended by the Tax Increase Prevention Act of 2014
RIA Special Study: Business Tax Provisions Retroactively Extended by the Tax Increase Prevention Act of 2014 Research Credit Extended The research credit equals the sum of: (1) 20% of the excess (if any)
More informationShareholder's Instructions for Schedule K-1 (Form 1120S)
2016 Shareholder's Instructions for Schedule K-1 (Form 1120S) Shareholder's Share of Income, Deductions, Credits, etc. (For Shareholder's Use Only) Department of the Treasury Internal Revenue Service Section
More informationEntity Choice in the Construction Industry: C Corp versus S Corp
WEALTH ADVISORY OUTSOURCING AUDIT, TAX, AND CONSULTING Investment advisory services are offered through CliftonLarsonAllen Wealth Advisors, LLC, an SEC-registered investment advisor Entity Choice in the
More informationInstructions for Form 8960
2017 Instructions for Form 8960 Department of the Treasury Internal Revenue Service Net Investment Income Tax Individuals, Estates, and Trusts Section references are to the Internal Revenue Code unless
More informationTax Considerations in Choosing the Form of Organization for a New Business
Tax Considerations in Choosing the Form of Organization for a New Business By Charles A. Wry, Jr. mbbp.com @MorseBarnes Boston, MA Cambridge, MA Waltham, MA mbbp.com CityPoint 230 Third Avenue, 4th Floor
More informationTECHNICAL CORRECTIONS ACT OF 2007 INCLUDES MANY SUBSTANTIVE CHANGES
Page 1 of 14 TECHNICAL CORRECTIONS ACT OF 2007 INCLUDES MANY SUBSTANTIVE CHANGES The Tax Technical Corrections Act of 2007 (TCA), was passed by Congress on December 19, 2007, and awaits the President's
More informationQualified Retirement Plan PENSCO Solo(k) Summary Plan Description. Standardized Individual 401(k) Profit Sharing Plan
Qualified Retirement Plan PENSCO Solo(k) Summary Plan Description Standardized Individual 401(k) Profit Sharing Plan Standardized Individual 401(k) Profit Sharing Plan Summary Plan Description Plan Name:
More informationTime is running out to make important planning moves before the year s end, so don t delay.
2015 Year-end tax planning Time is running out to make important planning moves before the year s end, so don t delay. The changes in various tax provisions brought about with the 2012 Tax Act continue
More informationBasis Calculations & Distributions for Pass-Thru Entities Case Suggested Solutions
Calculations & Distributions for Pass-Thru Entities Case Suggested Solutions Suggested Solution Disclaimer All problems, exercises, activities, etc., have at least one suggested solution, even if there
More informationINCOME TAXATION OF CORPORATIONS
H Chapter One H INCOME TAXATION OF CORPORATIONS INTRODUCTION AND STUDY OBJECTIVES Corporations, except for corporations electing to be taxed under Subchapter S, are taxed on their gross income less certain
More informationQUALIFIED RETIREMENT PLAN SUMMARY PLAN DESCRIPTION
QUALIFIED RETIREMENT PLAN SUMMARY PLAN DESCRIPTION SUPER SIMPLIFIED STANDARD INDIVIDUAL 401(K) PROFIT SHARING PLAN Plan Name: Your Employer has adopted the qualified retirement plan named above ( the Plan
More informationTax Considerations in Buying or Selling a Business
Tax Considerations in Buying or Selling a Business By Charles A. Wry, Jr. @MorseBarnes Boston, MA Cambridge, MA Waltham, MA mbbp.com This article is not intended to constitute legal or tax advice and cannot
More informationYear-End Tax Strategies
Year-End Tax Strategies Presented by CohnReznick s Government Contracting Industry Practice Ric Nelson, Director and Christine Williamson, Partner PLEASE READ This presentation has been prepared for information
More informationTax Considerations of Transfers to and Distributions from the C or S Corporation
College of William & Mary Law School William & Mary Law School Scholarship Repository William & Mary Annual Tax Conference Conferences, Events, and Lectures 2006 Tax Considerations of Transfers to and
More information*Brackets adjusted for inflation in future years.
Income Tax Planning Overview The American Taxpayer Relief Act of 2012 extended prior law for certain income tax rates; however, it also increased income tax rates on upper income earners. Specifically,
More informationCorporate Tax Segment 5D Corporate Liquidations. Corporate Complete Liquidations
Corporate Tax Segment 5D Corporate Liquidations University of Leiden International Tax Center May 2007 Professor William P. Streng University of Houston Law Center 4/30/2007 (c) William P. Streng 1 Corporate
More information