Two of our recent posts considered the IRS’s recent successes in applying the transferee liability rule to collect the federal income tax liability owing by the corporation from the sale of its assets from a corporation’s shareholders. In both cases, the shareholders had employed sham transactions in an attempt to avoid the corporate tax liability.
built-in gain
From “S” to “C” to “S,” or, “But I Was Already Taxed On That”
It is relatively easy for an S corporation to inadvertently lose its tax status. For example, a disgruntled shareholder may transfer all or a portion of his or her shares to a person that is not qualified to hold S corporation shares, such as a C corporation or a nonresident alien. Upon the occurrence of…
House Ways & Means Committee Makes a BIG Move
We have previously looked at the recognition period for built-in gains of S corporations, and the effect of the expiration of the temporary reduction of this period, under the American Taxpayer Relief Act of 2012, to five years. Earlier this week, however, the House Ways and Means Committee approved six “tax extender” bills to…
S Corps: Not Gone Yet
It has become relatively rare for an accountant or attorney to recommend the use of an S corporation for a newly-formed, closely held business. Instead, the LLC, taxable as a partnership, has become the entity of choice for most start-ups, and for good reason: it is a flow-through entity for income tax purposes, and it…
S Corp Sales, Built-In Gain, and 2013
Last year saw many taxpayers selling appreciated assets. The primary reason for this activity was the imminent increase, in 2013, of the long term capital gain rate, and the imposition (in some cases) of a 3.8% tax on net investment income, both of which would impact sales of assets owned directly by individuals or…