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C Corp-to-S Corp: It “Pays” To Be The Last In and First Out?

By Farrell Fritz P.C. on August 10, 2015
Posted in Federal Tax Issues

Tax-Free? Not Quite.

In general, a C corporation may achieve pass-through treatment for income tax purposes, without triggering immediate income or gain recognition, by electing to be treated as an S corporation.

One caveat to this general rule, however, is the so-called “LIFO Recapture” rule. Under IRC Sec. 1363(d), an electing C corporation that…

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