s corporation Archives

Feature Article

Will Your Client’s LLC Operating Agreement Make an Election Under Subchapter S Invalid?

Organization of a business enterprise as a limited liability company (LLC) has a number of advantages. In addition to ease of formation, state LLC acts dispense with many of the formalities required for corporations and wide latitude is given to... Patrick D. Dimmitt

Fall 2024, Feature Article, Form 1120-S, Subchapter S, ULLCA, safe harbor, Private Letter Ruling 201949009, §105(b), debt, Private Letter Ruling 201930023, Rev. Proc. 2022-19, limited liability company, Private Letter Ruling 202315005, §3.06, Private Letter Ruling 202110010, Corporate Governing Provision Statement, Form 8832, §704, §3.06(d), §1362(f), §83(b), s corporation, Treas. Reg. §1.704-1(b)(2), stock, Treas. Reg. §1.704-1(b)(2)(ii)(b)(2), employee, §1361(1)(D), Private Letter Ruling 202111011, election, Treasury Regulation §1.1361-1(l)(1), Private Letter Ruling 202310001, LLC, §338(h)(10), Uniform Limited Liability Company Act

Preparation

Debt Basis: Is It What You Think It Is?

With the creation of Form 7203, basis has become a hot topic. In 2019, the Internal Revenue Service (IRS) started sending Letter 5969i which said: “Our research indicates you may have claimed pass-through loss o... LuSundra Everett, EA, NTPI Fellow®

Spring 2024, Preparation, §385(a), s corporation, Notice 94-97, basis, §1.1366-2(a)(2)(ii), §1.1366-2(a)(1)(i), loans, §1.1366-2(a)(1)(ii), debt, Form 7203, Letter 5969, §1366(d)(1), §1.1366-2(a)(2)(i)

Preparation

Key Considerations for Enrolled Agents in the Upcoming Tax Season

The Tax Cuts and Jobs Act (TCJA) of 2017 brought substantial changes to individual income taxes, but many of these provisions are scheduled to expire at the end of 2025. As tax practitioner... Stephen Molchan, EA

Winter 2023, Preparation, SECURE Act 2.0, partnership, Alternative minimum tax, ROTH IRA, limited liability company, LLC, sole proprietor, adjusted gross income, AGI, required minimum distribution, TCJA, RMD, Tax Cuts and Jobs Act, capital gains, s corporation, c corporation, §199A

Feature Article

2023 Energy Credits Updates and Planning

Changes made in the Inflation Reduction Act (IRA) of 2022 have created new planning opportunities for tax professionals and their clients. As enrolled agents (EAs), we need to be aware of these changes in order to better s... Patrick Knightly, EA

Winter 2023, Feature Article, ENERGY STAR®, §25C, International Energy Conservation Code, residential clean energy credit, IECC, §25D, Form 8908, Form 3800, s corporation, Form 5695, Schedule K, IRA, retirement savings contribution credit, Form 8978, elderly, child tax credit, disabled, adjusted gross income, mortgage interest credit, AGI, first-time homebuyers’ credit, Inflation Reduction Act

Feature Article

Small Business Inventory Rules Under the Tax Cuts and Jobs Act

The Tax Cuts and Jobs Act (TCJA) made a significant change to the rules for eligible small business taxpayers that were previously required to maintain inventories and utilize the accrual method of account... Patrick D. Dimmitt

Winter 2023, Feature Article, SEC, NIMS, Rev. Proc. 2023-15, nonincidental materials and supplies, Form 10-K, §274, applicable financial statement, Financial Industry Regulatory Authority, AFS, §1.446-1(c)(2), inventory, §1.162-3, §5.01(1)(f), Form 3115, first-in, §22.18(6)(b), §471(c), first-out, Rev. Proc. 2015-13, §1.471-1(b), FIFO, TCJA, §22.18(6)(a), §52(a), §461, Tax Cuts and Jobs Act, designated automatic accounting change number, §52(b), §1.451-3(a)(5), s corporation, DCN, §414(m), U.S. Securities and Exchange Commission, Schedule C, §22.18(17), §414(o)

ICYMI

A Roundup of Recent Discussions from the NAEA WebBoard.i

QUESTION #1: I have a new client, an S corporation with two shareholders (married couple) who moved to Texas last year, that have hired me to prepare their 2022 tax return. The corporation purchases aircraft... Patrick D. Dimmitt, EA

Winter 2023, ICYMI, Rev. Rul. 99-5, Reg. §1.471-1(b)(3), Reg. §301.7701-3(g)(1)(i), Reg. §301.6109-1(h)(2)(ii), Rev. Proc. 2013-30, §471(c), Reg. §1.351-3(b), §735(a), §4.03(1), Form 1125-A, Reg. §1.351-3(a), Rev. Rul. 77-412, §732(b), §731, s corporation, §732(c), §168(i)(7), §351, partnership, Rev. Rul. 67-65, §358(a), Reg. §301.7701-3(c)(1)(v)(C), NIMS, §708(b)(1), §5.03, Form 2553, §263A, National Incident Management System, §752(b), Reg. §301.6109-1(h)(1), LLC, inventory, §731(a)(1), EIN, Form 1065, Form 3115, Reg. §1.357-2(a), Internal Revenue Manual 21.13.4.3.1, Reg. §1.417-1(b)(6)(iii)(E), §357(c)

What Is — and Isn’t — Included in the Inflation Reduction Act of 2022

Feature Article

What Is — and Isn’t — Included in the Inflation Reduction Act of 2022

The Inflation Reduction Act of 2022 (IRA) was signed into law by President Biden on Aug. 16, 2022. It has been championed by the administration and Congress as the most sweeping climate and energy reform in history, altho...

Mar/Apr 2023, Feature Article, IRA, short-term capital gain, real estate, STCG, Inflation Reduction Act, long-term capital gain, LTCG, corporate alternative minimum tax, §1061, AMT, §4501, §451(b)(3), §56A, s corporation, adjusted financial statement income, The Tax Cuts and Jobs Act, AFSI, COVID-19, private equity

IRS Clarifies Timing of Paycheck Protection Program Loan Forgiveness Basis Increase

Preparation

IRS Clarifies Timing of Paycheck Protection Program Loan Forgiveness Basis Increase

The Internal Revenue Service (IRS) released three new revenue procedures last month clarifying Paycheck Protection Program (PPP) loan and other federal COVID-19 grant tax-exempt income recognition, expense deductions paid with COV... Jane Ryder, EA, CPA

Jan/Feb 2022, Preparation, s corporation, SBA microloan, partnership, COVIDTRA, Restaurant Revitalization grants, COVID-19, COVID-related Tax Relief Act of 2020, subsidiary member, PPP, tax-exempt income, Bipartisan Budget Act of 2015, Paycheck Protection Program, loans, carryback, SBA loans, Rev. Proc. 2021-49, pass-through, Schedule K-1, Emergency Economic Injury Disaster Loan, Form 1065, EIDL, net operating loss, SBA 7(a) loans, NOL, Rev. Proc. 2021-50, SBA Community Advantage loans

Limited Partners and Self-Employment Tax

Feature Article

Limited Partners and Self-Employment Tax

As tax professionals, we are often given Schedule K-1 forms by our clients in order to report their income and/or losses from their investments in pass-through organizations. How involved are we, ... Keith A. Espinoza, EA

Nov/Dec 2021, Feature Article, s corporation, Federal Insurance Contributions Act of 1935, Tax Court, limited partnerships, §1402(a)(13), Internal Revenue Code, limited liability partnerships, §1402(a)(1)-(17), self-employment, limited liability companies, Revised Uniform Limited Partnership Act of 1976, FICA, limited liability limited partnerships, SE, Form W-2, LLP, employee stock ownership plan, Social Security, LP, ESOP, Form 1040, LLLP, Renkemeyer, Schedule K-1, §1402(b), Form 8275, Schedule 1, Self-Employment Contributions Act of 1954, Form 8082, LLC, SECA

Tax News Briefs

Recent Court Cases of Interest

Gambling Loss Not Deductible as Casualty Loss The Ninth Circuit Court of Appeals has ruled that the taxpayer’s gambling losses did not qualify as deductible casualty losses. The taxpayer gambled occasionally, but only small amounts, and... TheTaxBook

Sept/Oct 2021, Tax News Briefs, §165(c)(3), s corporation, Pramipexole, compensation, IRS Publication 547, gambling, Ninth Circuit, Form W-2, §3401(a), §3401(c), Form 1099-MISC, theft, §165(a), nonemployee, California, Food and Drug Administration, FDA

IRS Updates Small Business Accounting Method Regulations

Tax News Briefs

IRS Updates Small Business Accounting Method Regulations

The Internal Revenue Service (IRS) has issued final regulations to implement the changes to the accounting method rules made by the Tax Cuts and Jobs Act (TCJA). Under Internal Revenue Code (IRC) §448(c), a business with gross receipts under $25 m... TheTaxBook

Mar/Apr 2021, Tax News Briefs, IRC §448, partnership, IRC §460, IRC §471, UNICAP, NIMS, Schedule K-1, IRS Notice 2020-75, IRC §471(c), TCJA, IRC §471(a), s corporation, IRC §263A, c corporation

Correcting Partnership Returns After the Centralized Partnership Audit Regime

Feature Article

Correcting Partnership Returns After the Centralized Partnership Audit Regime

Practitioners who make or find errors on a filed Form 1065 for their partnership clients may find themselves in for a bit of a shock when it comes to correcting those errors. Congress passed the Bipartisan Budget Act (BBA) of ... David Woods, EA

Mar/Apr 2021, Feature Article, amended, §6221(b), IRA, §6221(a), LLC, Schedule K-1, foreign entity, s corporation, 401(k), disregarded entity, c corporation, TIN, Reg. §301.6221(b)-1(c), nonprofit, Bipartisan Budget Act, Form 1065X, trust, BBA, Form 8988, estate, TEFRA, Form 8978, partnership, Tax Equity and Fiscal Responsibility Act, audit, CPAR

Reasonable Compensation: What Is It, Why Is It, and How the Heck Do We Get Our Clients to Understand It?

Feature Article

Reasonable Compensation: What Is It, Why Is It, and How the Heck Do We Get Our Clients to Understand It?

We doubt reasonable compensation compliance was part of your New Year’s resolution. However, the beginning of the year is the best time to address reasonable compensation with your clients. Getting all your ducks in a row now will make the end of the ... Paul S. Hamann and Jack Salewski, CPA

Jan/Feb 2021, Feature Article, s corporation, c corporation, Reasonable compensation

An Inquiry Into the Factors Aiding Clemency for Foreign Corporations Requesting Protective Tax Return Filing Deadline Waivers

Feature Article

An Inquiry Into the Factors Aiding Clemency for Foreign Corporations Requesting Protective Tax Return Filing Deadline Waivers

Foreign corporations (FCs) often have varying degrees of U.S. business activities which in turn subject them to varying degrees of U.S. tax exposure. Anthony (“Tony”) Malik, EA

Mar/Apr 2020, Feature Article, s corporation, c corporation, foreign, clemency, tax, asset, corporation, business, income

The Tax Cuts and Jobs Act Moves the U.S. Closer to a Territorial Tax System

Feature Article

The Tax Cuts and Jobs Act Moves the U.S. Closer to a Territorial Tax System

The Tax Cuts and Jobs Act (TCJA) fundamentally changes the taxation of outbound activities of U.S. corporations and foreign corporations doing business in the U.S. and moves the U.S. international tax regime closer to a territorial system on par with other developed countrie... Sean Clancy, JD; Frank Emmons, JD; Shahzad Malik, JD

Mar/Apr 2019, Feature Article, system, The Tax Cuts and Jobs Act, credit, tax, territorial, U.S., corporations, TCJA, s corporation, c corporation, foreign

A New Opportunity for Nonresident Aliens: Ownership in an S Corporation Introduction

Feature Article

A New Opportunity for Nonresident Aliens: Ownership in an S Corporation Introduction

Changes to U.S. tax law brought about by the 2017 Tax Cuts and Job Acti (TCJA) have affected many longstanding tax planning tools. One favorable change amends the rules regarding the persons who can own shares of an S corporation. Historically, the S corporation election was ... Rusudan Shervashidze, JD; Stanley C. Ruchelman, JD

Mar/Apr 2019, Feature Article, investment, tax, TCJA, Tax Cuts and Jobs Act, s corporation, reform, benefits, investing

Impact of Tax Reform on Choice of Entity

Feature Article

Impact of Tax Reform on Choice of Entity

The tax reform legislation known as the Tax Cuts and Jobs Act that was passed by Congress and signed by President Trump on December 22, 2017, has significantly changed how many businesses and their tax advisors approach the choice of entity decision. When deciding on how to be cla... Timothy C. Smith, JD

Mar/Apr 2019, Feature Article, tax, TCJA, Tax Cuts and Jobs Act, s corporation, c corporation, reform, choice, entity

Feature Article

Undisclosed Foreign Accounts: Protecting the Executor

An executor administering an estate with undisclosed foreign accounts is exposed to substantial risks that may not be apparent. The following discussion is intended for executors and administrators who wish to understand and avoid those risks.1 A Typical Scenario A taxpayer dies. An executor is appointed and learns of foreign accounts: Tose foreign accounts hold investments. The ... Frank Agostino, Esq., Nicholas R. Karp, EA, USTCP

Mar/Apr 2018, Feature Article, undisclosed, executor, tax, accounting, corporation, business, s corporation, c corporation, foreign, accounts

Feature Article

Taxation of Dividends From Foreign Corporations

U.S. persons frequently own legal entities abroad to pursue a variety of economic interests. Common U.S. ownership scenarios include expatriates forming foreign entities to locally operate businesses, U.S. residents forming foreign entities to capitalize on expansion opportunities, and entrepreneurial immigrants coming to the U.S. More often than not, these foreign entities default to corporate status à la the tax law’s default classification... Anthony (“Tony”) Malik, EA

Mar/Apr 2018, Feature Article, foreign, dividends, tax, taxation, corporations, business, s corporation, c corporation