New IRS Rules for S Corporations: Activity and Basis Reporting, NRAs, QBI, and IRS Basis Audits

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Wednesday, June 3, 2020

Recorded event now available

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Course Materials

This course will address the latest Subchapter S corporation tax issues. Our panel will discuss the requirements to include basis schedules in individual income tax returns, separate activity reporting in Form 1120-S, nonresident aliens and ESBTs, and preparing for the current IRS initiative focusing on audits of S corporation basis.

Description

Basis adjustment is the biggest S corporation issue for IRS audits and the focus of the latest IRS initiative. Having up-to-date basis schedules for S corporations is critical. Now S corporations shareholders are required to submit basis schedules with their individual income tax returns in certain situations, including when losses are reported to the shareholder. Practitioners may need to calculate or update these schedules.

Notice 2019-66 did away with the requirement that partnerships must separately report activities, but the IRS did not afford S corporations this same relief. Section 465 limits the amount of deductible losses owners can claim based on amounts at risk. The AICPA has asked for clarification in its letter dated Jan. 8, 2020, to the IRS. Still, tax preparers must handle these returns appropriately in the current year.

Similar to other businesses, the recent tax law provided S corporations with the benefit of a QBI deduction. There are steps tax practitioners can take to help maximize this deduction. And since there are substantial penalties for noncompliance, proper reporting for the flow-through deduction on Schedules K and K-1 reporting is essential.

Before the recent tax reform, an ESBT (electing small business trust) beneficiary had to be an eligible S corporation shareholder. Now, a nonresident alien can be a potential current beneficiary of an ESBT without being a disqualified shareholder.

Listen as our panel of experts covers the latest developments with S corporations, including basis and at risk reporting, NRAs as shareholders of ESBTs, the new 1371(f) regulations, and other recent developments.

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Outline

  1. Basis reporting
  2. Separate reporting of activities
  3. Specific IRS challenges to S corporations
  4. Nonresident aliens as ESBT beneficiaries
  5. QBI calculations and reporting
  6. New 1371(f) regulations
  7. Other S corporation developments

Benefits

The panel will review these and other key issues:

  • Updating basis schedules to prepare for IRS challenges
  • Calculating and reporting QBI flow-through items
  • Handling separate reporting of activities
  • Current court cases and challenges to S corporations

Faculty

Anderson, Kevin
Kevin Anderson
Managing Director, National Tax Office
BDO USA

Mr. Anderson's practice is focused in the areas of mergers and acquisitions, S corporations, Ccorporations,...  |  Read More

Jamison, Robert
Professor Robert W. Jamison, CPA
Professor Emeritus of Accounting
Indiana University

Mr. Jamison is Professor Emeritus of Accounting at Indiana University, Purdue University, Indianapolis (IUPUI). His...  |  Read More

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