Buying or selling an interest in a closely held corporate business is an important transaction. CPAs must be prepared to fully consider the unique tax characteristics of an S corp to advise their clients, whether sellers or buyers.
We’ll consider buyer and seller perspectives, relevant law, tax planning opportunities, pitfalls to avoid and necessary compliance issues. Review rules related to determining stock basis of an S corp, treatment of suspended losses, distributions, accumulated adjustment accounts, the built-in gain tax, excess net passive income tax, allocation of income and losses related to changes in ownership of an S corp, and tax treatment of S corp election terminations.
Finally, consideration of different tax consequences of asset sales and stock sales, including Sect. 338 and 336(e) elections. The significant changes made by 2017 TCJA are discussed and analyzed.
Identify potential tax advantages or costs of making an S corp election.
Recognize tax considerations of liquidating an S corp.
Determine when to use Secs. 338(g), 338(h) (10), 336(e) and qualified subchapter S subsidiary elections.
Identify allocation taxable income or loss between the buyer and shareholder.
Determine how to use an ESOP to sell stock to employees.
Identify the basics of acquisitive reorganizations and S corps.
Making the S election.
“Qualified business income” deduction (IRC 199A)
Built-in gain tax, including planning ideas.
Net excess passive income tax and planning.
Liquidation of S corps, including special rules related to installment obligations.
Suspended loss rules, including tax planning opportunities.
Sect. 338(h)(10) and Sect. 336(e) elections.
Qualified subchapter S subsidiary election.
Special rules for net operating losses and tax credit carryforwards.
Consequences of and tax planning for termination of S corp elections.
Redemption of S corp stock, including planning opportunities.
Basics of acquisitive reorganizations as applied to S corps.
CPAs, attorneys, owners, financial managers, IRS and FTB employees.