S Corporations: Key Issues, Compliance, and Tax Strategies
How can you make the S corporation business model work for your clients? This course gives you the knowledge you need to explain the benefits and drawbacks of electing S corporation status and to effectively discuss why many business taxpayers favor the pass-through entity over the C corporation.
Further, you will learn the importance of shareholder basis when contemplating distributions and how they affect the accumulated adjustment account. Finally, you will be able to advise your clients about the built-in gains tax, when it may apply to them, and steps to avoid it.
This course will prepare you to do the following:
- 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 corporation 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.
- 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.
- Advantages and disadvantages of S corporations
- S corporation qualifications
- Electing S corporation status
- Termination of S corporation status
- S corporation tax on built-in gains
- S corporation pass-through to shareholders, basis, and losses
- S corporation distributions
- Taxable year of S corporations
- S corporation passive activity rules, fringe benefits, and other considerations
Who Will Benefit?
- Staff and senior associates in public accounting who assist clients with tax compliance for closely held S corporations
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