09 Mar 2021
You Can Have It Both Ways! Subchapter S Conversions, Coming and Going
An S corporation can provide certain tax benefits that are unavailable to a C corporation. The relatively new qualified business income deduction, for instance, offers S corporation shareholders the ability to shelter up to 20% of their qualified business income from taxation, a benefit unavailable for C corporation shareholders. An S corporation shareholder is also entitled to debt basis for shareholder loans to the corporation, and can use that basis to deduct losses and deductions. This practice note addresses certain U.S. federal income tax considerations when converting a C corporation to an S corporation and when converting an S corporation to a C corporation.
Related Content
- Tax Issues and Considerations in Entity Conversion (C Corporation to Partnership) (Partnership to C Corporation)
Plan for the tax impact when a business entity changes form. This practice note addresses certain U.S. federal income tax considerations when converting a C corporation to a partnership, and when converting a partnership to a C corporation. - S Corporations: Tax Considerations When Liquidating
Learn the tax issues that arise in the liquidation of an S corporation. The tax analysis of the liquidation of an S corporation is the same as for a C corporation. Whether the payment is made in property or money, the funds are treated as the consideration exchanged for the stock. However, the unique tax treatment afforded to S corporations brings further complexities and tax issues, including the pass thru tax treatment and built-in gain rules. - Eligibility Requirements for S Corporations
Read this practice note which describes the decision to form an S corporation, analyzes the eligibility criteria for S corporation status, and discusses the compliance and reporting requirements faced by S corporations.
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