S Corporations

Description

The intricacies of setting up and terminating an S corporation in this course are detailed and taxation is discussed. This entity's numerous advantages and disadvantages are identified to help practitioners determine whether the S corporation is most suitable for their clients. Eligible domestic corporations can avoid double taxation by electing to be treated as an S corporation under the rules of Subchapter S. Subchapter S provides an optional method of corporate taxation and allows small business corporations to elect unusual tax treatment. The S corporation is taxed like a partnership, but in other respects, S corporations are taxed like C corporations.

Highlights

• Advantages & disadvantages • S corporation status • Termination • Income and expense • Built-in gain • Passive income • Basis of stocks and debts • Distributions • Form 1120S • Fringe benefits

Objectives

• Recognize a client's potential use of the S corporation format and its tax advantages and disadvantages by citing the requirements for an S corporation election, identifying eligible S corporation shareholders, specifying the one-class-of-stock regulations, and determining the ways an S corporation election can be terminated. • Identify the concepts of S corporation taxation by: • -Recognizing the application of passive income taxation, accumulated adjustments accounts, built-in gains, net operating losses, tax preference items, and potential capital gains taxes, • -Determining a shareholder's stock basis from capitalization and loan activity, • -Specifying the related party rules including their impact on deductions, available fringe benefits, and tax forms to use when filing as an S corporation.