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PPC's Guide to Tax Planning: S Corporations

PPC's Guide to Tax Planning: S Corporations

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    Practitioners Publishing




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PPC's Tax Planning Guide — S Corporations explains the tax consequences of electing and maintaining S status, operating the S corporation, and terminating the S election. It covers other tax issues, too, such as reorganizing the corporation, maintaining a QSub subsidiary, redeeming S stock, or liquidating the S corporation.

The Guide also addresses owner issues, such as maximizing the shareholder's basis in stock and debt, making distributions in the most tax-efficient manner, and estate planning for S shareholders.

Since many of the issues encountered when responding to client questions or planning transactions go beyond the S corporation provisions of the Code (Subchapter S), the Guide addresses operational issues too, such as electing and maintaining a fiscal tax year, using the cash method of accounting, and passing through the Section 179 deduction, among others. The Guide also provides an entire chapter on fringe benefits, deferred compensation plans, and qualified retirement plans, with an emphasis on the special rules applicable to S corporations and 2% shareholders.

Of particular interest this year are the implications of the Windsor case. The Supreme Court’s decision on the Defense of Marriage Act (DOMA) and its impact on same-sex couples affect the election of S status, the ownership of stock in S corporations, and the related party rules that apply to S corporations and their shareholders. This year’s Guide explains these issues and their potential impact on a wide variety of frequently encountered issues, from electing S status and counting S shareholder, to more complex issues such as qualifying a stock redemption transaction for capital gain treatment.

Effective tax planning sometimes requires the ability to repair the effects of a late or inadvertently invalid election. The IRS recently consolidated the procedures previously provided by several revenue procedures for obtaining relief from late S corporation elections, Electing Small Business Trust (ESBT) elections, Qualified Subchapter S Trust (QSST) elections, and Qualified Subchapter S Subsidiary (QSub) elections. These procedures do not require payment of a user fee. The Guide covers the new procedures and how they can be taken advantage of to achieve the client’s larger tax planning objects. The current tax planning landscape is far from settled and continuing uncertainty persists. This year’s edition has been revised for the Affordable Care Act rules that become effective in the next two years. To maximize tax planning opportunities and minimize pitfalls, all businesses need to be aware of the requirements, the transition rules for 2014 and 2015, and potential penalties for not offering affordable health coverage that provides a minimum level of coverage to full-time employees and their dependents.

In addition, effective tax planning must consider the impact of the net investment income tax on S shareholders. To meet this challenge, several chapters include discussion of the newly finalized (and additional proposed) 3.8% net investment income tax regulations, with special focus on their application to S corporation pass-through income, dispositions of S stock, distributions from the corporation, and activities that are considered passive under the tax. The Guide has also been updated for the recently finalized regulations governing liability for the 0.9% additional Medicare tax.

The 2014 edition also covers the changes resulting from the December 2013 issuance of the final and newly proposed tangible property regulations, which include simplified guidance and safe harbor provisions not found in the prior temporary regulations.

The chapters are written and updated by experienced practitioners, with the concepts illustrated by hundreds of real-life examples. The Guide also includes checklists, worksheets, elections, and other practice aids to promote an efficient and knowledgeable approach to handling transactions that clients are contemplating or have completed.

And to help you and your staff transition from tax compliance to tax planning, the Guide includes a tax planning roadmap. By reviewing a client's (or potential client's) Form 1120S or Schedule K-1, you can identify potential planning strategies that can be used as a starting point for further discussions with the client.

Tax planning can solidify your relationship with your clients and save them thousands of dollars. Now in its 28th edition, PPC's Tax Planning Guide — S Corporations is the one resource you need to efficiently and effectively provide tax planning services to your S corporation clients and their shareholders throughout the year.

  • Tax Planning for S Corporations
    • Chapter 1 Eligibility
    • Chapter 2 Election
    • Chapter 3 Termination
    • Chapter 4 Taxation of S Corporations
    • Chapter 5 Pass-through to Shareholders
    • Chapter 6 Basis and Losses
    • Chapter 7 Distributions
    • Chapter 8 Passive Activity Losses
    • Chapter 9 Tax Years, Accounting Methods, and Strategies for Saving Taxes
    • Chapter 10 Fringe Benefits and Retirement Plans
    • Chapter 11 Reorganizations and Recapitalizations
    • Chapter 12 Qualified Subchapter S Subsidiaries
    • Chapter 13 Dispositions of Stock and S Corporation Property
    • Chapter 14 Redemption of Stock
    • Chapter 15 Liquidation
    • Chapter 16 Estate Planning For S Shareholders
    • Appendix A Roadmap to S Corporation Tax Planning
    • INDEX
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  • List of Substantive Changes and Additions (March 2015) View