Tax Strategies for S Corporations in Financial Distress

Description

The differences in federal tax rules for S corporations, as compared to C corps and other entities, can be complex enough under normal circumstances. Today's global financial crisis requires that tax advisors and professionals master the intricacies of the IRS regulations for S corps.

Federal code sections relating to cancellation of debt income, restructuring and reorganization, and stock transactions demand the attention of professionals responsible for tax planning and compliance for S corps, their parents and their shareholders.

Depending on the structure and financial health of the S corp, the regulations can either offer relief under the code or create pitfalls to avoid. Tax advisors and executives must also understand the new provisions in the 2009 stimulus legislation to take full advantage of potential tax benefits.

Listen as our panel of tax and accounting professionals analyzes the federal regulations governing COD income, Sect. 368 reorganizations, and stock transactions most relevant to S corp tax departments and their advisors during the financial crisis.

Outline

1. Cancellation of debt income issues for S Corps
   1. Types of transactions that create COD income
   2. Types of transactions that are excluded under COD income
   3. Possible reduction in NOLs, other credits
2. Restructuring and reorganization strategies for distressed S Corps
   1. Sect. 368 reorganizations
      1. E reorganizations
      2. G reorganizations
   2. Converting S Corps in parent Q-sub groups
   3. Troubled debt restructuring tax implications
3. Tax impact of stock and ownership changes
   1. Types of transactions that can inadvertently trigger change of ownership, termination of subchapter S election
   2. Impact of various stock transactions
4. Recent changes to laws and regs governing S Corps
   1. American Recovery and Reinvestment Act of 2009 provisions reducing recognition period for built-in gains on S Corps
   2. T.D. 9422 on shareholder rules, PCBs, ESTBs
   3. REG-102822-08 proposed COD income changes

Benefits

The panel will help you navigate complex tax rules for S corporations by:

• Analyzing IRC Sect. 108 rules for S corps that recognize cancellation of debt income.
• Evaluating the various restructuring options under Sect. 368.
• Detailing the tax impacts of stock acquisitions, distributions and ownership changes.
• Breaking down recent regulatory changes for S corp taxation, including provisions from the 2009 stimulus bill.

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