S Corporations: Special Tax Challenges

Confronting the Key Issues of Basis Rules, Business Structure, Payroll-Taxable Wages, Contributions and Distributions

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

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Conducted on Tuesday, June 26, 2012

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Course Materials

This teleconference will provide tax advisors with an overview of frequently misunderstood and often overlooked tax considerations affecting S Corporations. The panel will explain the key differences between S-Corps vs. LLCs and partnerships.

Description

S Corporations have become the most common corporate form due in large part to tax advantages offered to shareholders by pass-through taxation. However, tax professionals often fail to recognize crucial distinctions from other pass-through entities: LLCs and partnerships.

The IRS has identified one of the most common S Corporation tax return blunders: failing to observe payroll requirements to ensure that a reasonable amount of pay for shareholder-employees is recognized as wages.

Other specific aspects of S Corps with potentially large tax implications include treatment of contributing shareholder tax basis, distributions, stock restrictions, and S subsidiaries. Tax advisers must be mindful of these distinctions both when choosing a business entity form or preparing tax returns.

Listen as our tax attorney panel examines the distinguishing tax issues of the S Corporation that create problems for professionals and lay people alike, drawing comparisons with other business entities to facilitate making optimal choice of entity decisions and avoiding common tax computation errors.

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Outline

  1. S Corporation requirements and business structure
    1. Requirements overview
    2. Section 83—phantom stock
    3. S subsidiaries
  2. Contributions
    1. Basis tracking
    2. Related entities
    3. Open account issues
  3. Payroll taxable wages
  4. Distributions

Benefits

The panel will review these and other key questions:

  • How does the IRS distinguish reasonable wage compensation from residual net operating income flowing through to the S Corporation shareholder/employee?
  • What is the difference between S Corporation and partnership treatment of entity-level debt in the owner's outside basis in the ownership interest?
  • How do you comply with the new Open Account Debt rules?
  • When selling equity interest in an S Corporation, what pitfalls should you be aware of?
  • Under what circumstances are an LLC or partnership entity choice preferred over an S Corp?

Following the speaker presentations, you'll have an opportunity to get answers to your specific questions during the interactive Q&A.

Faculty

Barnett, Robert
Robert S. Barnett, JD, MS (Taxation), CPA
Partner
Capell Barnett Matalon & Schoenfeld

Mr. Barnett’s practice is highly concentrated in the areas of taxation, trusts, estates, corporate and...  |  Read More

Renato Matos
Renato Matos
Partner
Capell Barnett Matalon & Schoenfeld

Mr. Matos' practice concentrates on corporate, taxation and real estate law, including stock...  |  Read More

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