Soon after subchapter K's codification, Congress introduced a second, simpler pass-through system-- subchapter S
-into the federal income tax.
In a high percentage of cases the Subchapter S
corporation and the LLC is used in entrepreneurial business formation often for the reason of liability protection.
338(h)(10) election results in P owning a new subsidiary with a stepped-up basis in its assets and A and B paying a single level of tax on the sale (because any S gain on the deemed asset sale should flow through and be taxed to the shareholders under the normal subchapter S
Conversely, Subchapter S
corporations generally do not pay tax on profits.
When selling their businesses, most owners of small C corporations will pay double the tax that they would have paid were they an LLC or Subchapter S
A beneficiary of a qualified subchapter S
trust may deduct suspended losses under the at-risk rules and the passive loss rules when the trust disposes of the S corp stock.
ICBA is proud to have supported, from their inception, the Subchapter S
corporation provisions included in the American Jobs Creation Act," said Camden R.
Although the LLCs combination of limited liability and tax savings is in some ways similar to the benefits afforded by a Subchapter S
corporation or a limited partnership, the LLC is in many respects a very distinct and more flexible structure rather than the simple mixing of corporate benefits with partnership tax treatment.
Fox agreed the limitations imposed on being a Subchapter S
corporation are essentially removed.
Tax preparers need to keep in mind that, although an S corporation generally is taxed according to subchapter S
of the Internal Revenue Code, it is taxed as a C corporation when an issue is not addressed in that subchapter.
Indirect ownership, such as a beneficiary of an electing small business trust (ESBT) or qualified subchapter S
trust (QSST), will also be included in the one-family-member count.
11 /PRNewswire/ -- The Independent Community Bankers of America (ICBA), the nation's largest banking trade association, praised Congress for passing Subchapter S
reform legislation today that ICBA has long championed for millions of small businesses, including many community banks.