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.


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.



  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


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.


Barnett, Robert
Robert S. Barnett, JD, MS (Taxation), CPA

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

Capell Barnett Matalon & Schoenfeld

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

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