Archive: S Corporation

  • Clear Filters

Navigating S Corporation and Partnership Loss Planning Rules and Limitations

Prior to the enactment of the Tax Cuts and Jobs Act (TCJA), the largest tax overhaul in decades, individuals could freely deduct their flow-through business losses from their partnerships and S corporations against their wages and other investment income, subject to basis, at risk and passive activity limitations. As a result, a taxpayer with sufficient […]
December 20, 2019

LLC Operating Agreement Can Terminate an S Corporation Election

Limited liability companies (LLC) should be careful that their operating agreement does not contain language that violates the criteria required to make a small business corporation (S corporation) election. LLCs should also make sure the agreement does not contain language in any amendments or restatements that would cause an S corporation election to automatically terminate. […]
October 30, 2019

IRS Issues Practice Aid on S Corporation Stock Basis Ordering Rules

In early January 2018, the IRS issued a practice unit on the S Corporation stock basis ordering rules. A practice unit is issued by the IRS’ large business and international group and consists of training materials and job aids to educate IRS agents on specific issues. While practice aids cannot be relied upon to support […]
October 1, 2018

What Does an S-Corporation Need to do in Preparation for Year-end Payroll Taxes?

Below are several time sensitive items that S-Corporations should take into consideration as part of their year-end planning. Most importantly, remember that the Internal Revenue Service requires an owner of an S-Corporation to pay themselves a reasonable salary for services provided to the corporation, which should be reported on Form W-2.  
December 16, 2016
  • By:
  • Sohamy Sandoval

M&A Shop Talk III

Have you heard of a horizontal, double dummy technique to achieve a partial asset sale tax treatment with stepped-up basis adjustment? A method that also accommodates a tax-deferred equity rolled-over feature? Generally, this tax planning technique is more common in the context of a public company business combination scenario; however, it has some limited applicability […]
June 16, 2016

M&A Shop Talk VII

The most recent M&A Shop Talk highlighted the major tax advantages of completing a leveraged ESOP buyout transaction as an exit strategy for S corporation structured small businesses with no liquidity except its workforce. Now, we’ll cover a parallel discussion in the context of a C corporation target. Currently, IRC Section 1042 tax provisions allow owners with […]
June 7, 2016

M&A Tax Shop Talk – “F reorganization” Part II

Still thinking about selling your business? Do you have the proper techniques and structures in place? Generally, one of the most powerful planning techniques to structure a tax efficient sales transaction of your business is the installment sale reporting method under IRC Section 453. However, there are some complexities and inherit limitations that requires an […]
May 11, 2016

M&A Shop Talk

What is the most efficient tax structure to recruit and retain top talent, and set your business model apart from the competition? The partnership reporting form (i.e., including an LLC owned by at least two members under the default classification rules) is generally the most flexible and accommodating tax operating structure to attract and incentivize top-performing talent. […]
April 27, 2016

M&A Tax Shop Talk – “F reorganization”

The “F reorganization” has become the tax planning structuring technique of choice in today’s middle market M&A world. So, what does it mean to you as a seller? First, F reorganization is only applicable in the context of corporations not LLCs. Second, in the middle market M&A world, which is still controlled by S corporation’s […]
April 27, 2016

Escaping the Built-In Gains Tax

Are you considering converting your C corporation to an S corporation? If so, being aware of the built-in gains tax that may be assessed to your corporation is essential. With the proper planning, such as timing the sale of the built-in gain assets, you can escape paying the dreaded built-in gains tax. What is built-in […]
January 26, 2016