Tax Planning-Buying and Selling S Corporations 2024

Overview

Buying or selling an interest in a closely held corporate business is an important transaction. CPAs must be prepared to fully consider the unique tax characteristics of an S corporation to advise their clients, whether sellers or buyers. We’ll consider buyer and seller perspectives, relevant law, tax planning opportunities, pitfalls to avoid and necessary compliance issues. Review rules related to determining the stock basis of an S corporation, treatment of suspended losses, distributions, accumulated adjustment accounts, the built-in gain tax, excess net passive income tax, allocation of income and losses related to changes in ownership of an S Corp, and tax treatment of S corporation terminations. Finally, consider different tax consequences of asset and stock sales, including Sect. 338 and 336(e) elections.

Highlights

• Built-in gain tax, including planning ideas • Net excess passive income tax and planning • Liquidation of S corps, including special rules related to installment obligations • Suspended loss rules, including tax planning opportunities • Sect. 338(h)(10) and Sect. 336(e) elections • Qualified subchapter S subsidiary election (QSUB) • ESOPs • Redemption of S corporation stock, including planning opportunities • Basics of acquisitive reorganizations as applied to S corporations

Prerequisites

S Corporation experience

Designed For

CPAs

Objectives

• Recognize tax considerations of selling assets of an S corporation • Determine when to use Secs. 338(g), 338(h) (10), 336(e) and qualified subchapter S subsidiary elections • Identify the allocation of taxable income or loss between the buyer and shareholder • Recognize tax considerations of selling stock of an S corporation • Identify tax planning opportunities related to the redemption of stock of S corporation • Recognize the tax consequences of an S corporation acquiring the stock of a corporation