Strategic S Corp Conversion to Avoid Tax Basis Limitation

Time. We can’t stop it, but we can use it. We can use it to take advantage of compounding to grow our savings. We can use it to pay down debt to increase equity. And we can use it for tax planning. Time is one aspect of tax planning. It can help taxpayers avoid just…

S Corporation: Distribution of Appreciated Assets

Those who set up S corporations usually do so as their accountant told them that it could save taxes. This is often true. The S corporation can result in tax savings. This may include the standard reduction in self-employment/payroll taxes or, for more advanced tax planning, income taxes. The ability to freeze the value of…

The Late S Corporation Election

The Subchapter S corporation remains a popular choice of entity for small and medium-sized businesses. This is true even after the TCJA of 2017 lowered the income tax rate for C corporations to 21 percent. Unlike many other changes made by the TCJA, the 21 percent flat corporate rate is permanent. It is not going…

Double Tax on Inter-Company Transfers

There are those who make things happen. They are usually the ones doing what it takes even when doing so is difficult, tiring, and draining. They are the ones that often make personal sacrifices and take risks to succeed. They are the ones that had the luck or grit to stick with something to see…

S Corporation Election Not Signed by Community Property Spouse is Valid

There are tax implications for just about everything we do. Even simple business transactions present tax opportunities and pitfalls. While we prefer to focus on tax opportunities, we also spend a lot of time fixing tax problems. We are in Texas, which is a community property state. So one issue we see over and over…

S Corp Election Terminated by Standard LLC Language

S Corp Election Terminated By Standard Llc Language

If you make an S corporation election and do not fix the standard language that is typically included in the LLC company agreement, you’ll void the S corporation election. This is an issue that is usually identified by during an audit by the IRS. Many taxpayers overlook this issue until it is too late (it…

Loan to an S Corporation to Allow Tax Loss

Loan To An S Corporation To Allow Tax Loss

Tax basis can limit a shareholder’s loss from an S corporation. If an S corporation has a tax loss but the shareholder doesn’t have sufficient tax basis to take the loss, the shareholder will typically have to loan money to the S corporation. This tax debt basis makes the loss allowable in the current year.…

The IRS Recent Focus on S Corp Owners

The Irs Recent Focus On S Corp Owners

The IRS has announced several new compliance campaigns focusing on S corporations. This is needed as the audit rate for S corporation is extremely low. The most recent IRS compliance campaign focuses on shareholder stock basis issues for S corporation owners. Those who have significant S corporation losses or large distributions should take time to…

Using Warrants to Make Future Purchases of S Corporation Stock

Using Warrants To Make Future Purchases Of S Corporation Stock

Can you make a gift to charity but retain the right to pull back the value of the gift in the future, and still get a charitable deduction for the gift? The court said “no” in In Re Stapley, No. 09-47699 RLE (Bankr. N.D. Cali. 2019). The failed tax shelter included an S corporation whose…

The Timing Trap: Failed Installment Sales

The Timing Trap: Failed Installment Sales

One of the best tax planning strategies is simply to accept payment over time. This is a simple, but effective tax planning strategy as it can allow taxpayers to spread out their tax liability over time. This is possible given the installment sale rules. What happens if you sell an asset and are to receive…