The use of an S corporation election can dramatically affect the tax consequences of owning a corporate business. Focus on the requirements that must be satisfied and the process necessary to make this tax election.
Once the election is made, it can be voluntarily or involuntarily be terminated. Discuss possible relief for inadvertent terminations. Where termination is voluntary, tax planning opportunities will be identified and explained.
Identify and discuss the requirements that must be satisfied to make the S corporation election.
Recognize complications related to having trusts, estates, tax exempt and ESOP shareholders.
Review and application of the one class of stock requirement to accomplish continued qualification.
Determine tax planning ideas to accommodate economic participation by disqualified investors.
Identify the process that must be followed to make the election, including when the election must be made and the consequences of a defective election.
Recognize tax planning opportunities related to a voluntary termination.
Identify the possible application of the inadvertent termination rule to avoid an unplanned termination.
Recognize limitation on re-electing after a termination.
Qualified shareholder requirement
Trusts as shareholders
Estates as shareholders
Qualified tax exempt shareholders
Tax planning ideas to accommodate economic investments by disqualified investors
Special rules for counting number of shareholders
One class of stock requirement
Indirect preferences creating risk of failing one class of stock requirement
Making an effective S corporation election
Relief for late or defective elections
Inadvertent termination relief for involuntary terminations
Reasons for involuntary termination
How to voluntarily revoke an S corporation election
Why voluntarily revoke an S corporation election
Tax planning related to a planned termination.
Re-election after termination
CPAs and attorneys.
Understanding the basics of taxation of corporations, S corporations and partnerships.