New Section 385 Regulations for S Corps: Protecting S Elections and Avoiding Debt Reclassification
Analyzing Related-Party Debt Instruments to Withstand IRS Challenge to S Corp Status
Recording of a 110-minute CPE webinar with Q&A
This course will provide tax advisers with a critical first look into the impact of IRS proposed Section 385 regulations reclassifying certain related-party debt as equity will have specifically on S corporations and domestic entities. The panel will discuss the scope of the proposed regulations, examine what types of structures and transactions are subject to reclassification as equity, and offer practical guidance for tax advisers to identify debt instruments that could potentially trigger reclassification to equity, leading to a currently taxable event and potentially jeopardizing S corporation status.
- Related party debt rules
- Debt bifurcation rules
- Debt reporting requirements
- Potential problem transactions in S corporation transactions
- Restructuring options to avoid reclassification to preferred shares
The panel will discuss these and other critical questions:
- What is the purpose of the proposed regulations?
- What common transactions and instruments are subject to possible re-characterization?
- What impact will the proposed regulations have on documentation requirements?
- How can tax advisers identify potentially problematic debt transactions in an S corporation’s financials?
- What planning options are available for S corp advisers to ensure a related-party debt instrument will be respected as debt to avoid reclassification to preferred stock?
Matthew A. Stevens
Ernst & Young
Mr. Stevens focuses on planning and controversy matters regarding the U.S. federal income tax consequences of... | Read More
Mr. Stevens focuses on planning and controversy matters regarding the U.S. federal income tax consequences of transactions, specializing in the design, structuring and implementation of domestic and international financial transactions. He advises both U.S. and non-U.S. commercial banks, hedge funds, life settlement funds, high net worth individuals, as well as foreign and domestic multinational corporations. He published articles on international aspects of U.S. income tax and the taxation of financial products and transactions.Close
Andrew L. Howlett
Miller & Chevalier
Mr. Howlett practices in the area of federal income tax with an emphasis on tax planning, tax-related... | Read More
Mr. Howlett practices in the area of federal income tax with an emphasis on tax planning, tax-related transactional matters and tax controversy. He provides counsel on domestic and cross-border corporate tax issues, including advice on asset and stock purchases, joint ventures, mergers, recapitalizations and spin-offs. He also advises individuals, and has substantial experience with the IRS’s voluntary disclosure program. He has a substantial pro bono practice, including assisting 501(c)(3) organizations and individuals with a broad range of tax issues.Close
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