This CPE course is a comprehensive introduction to the nature of S Corporations and how they are treated for income tax purposes. You will examine some of the advantages and disadvantages of incorporation and then go through the requirements for electing to be an S Corporation. You will also review the rules for operating an S Corporation.
Why elect Subchapter S
S corporation qualifications
S corporation election
Termination of S corporation status
Tax on S corporation built-in gains
S corporation pass-through activity to shareholders
Shareholder basis and losses
Taxable year options
S corporation passive activity rules, fringe benefits, and other considerations
This course will prepare you to:
Determine when an S corporation may be advantageous for a business
Identify the potential disadvantages to operating as an S corporation
Identify the requirements that must be met to qualify as an S corporation
Recognize individuals and entities that are eligible to own S corporation stock
Determine how to make a proper S corporation election
Determine when the S election becomes effective
Identify who must consent to the election
Identify causes of voluntary and involuntary termination
Identify revocation of the election
Recognize events causing involuntary termination
Recall methods of allocating income for the short years caused by a termination
Determine whether an S corporation is subject to tax.
Calculate the tax on built-in gains
Determine income or loss that passes through to the shareholder
Identify the items of income, gain, loss, and deduction that adjust basis of shares and indebtedness and the order of application of the items
Determine how losses can be offset by debt basis after stock basis has been reduced to zero
Identify the concept of distributions
Determine how accumulated earnings and profits (AE&P), accumulated adjustments account (AAA), other adjustments account (OAA), and the shareholder’s basis are affected by distributions
Determine permitted fiscal years, elections, and user fees
Identify situations in which a fiscal year is allowable.
Recognize when a Section 444 election and resulting required payments should be made
Recognize active and passive income and determine material participation
Determine whether and to what extent passive losses can be deducted against other income
Identify which fringe benefits are deductible by the shareholders
Who Will Benefit? Staff and senior associates in public accounting who assist clients with tax compliance for closely held S Corporations
Advance Preparation: None
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