The
Subchapter S corporation and LLC by IRS code is supposed to be a pure flow through of profits and not taxed like a C corporation, which is taxed at the corporate level and then a dividend tax if dividends are made.
Many of these businesses were incorporated 20 to 30 years ago when limited liability corporations (LLCs) did not exist or were unpopular and
Subchapter S corporations had other disadvantages.
Another
Subchapter S Corporation Tries to Follow in Footsteps
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.
By qualifying as a
Subchapter S corporation, Hemet Bancorp would substantially eliminate its corporate level income tax liability.
Key Subchapter S reforms in the legislation include: * Increasing the number of
Subchapter S corporation eligible shareholders to 100 from 75; * Counting family members as only one shareholder; * Permitting S corporation shares to be held in Individual Retirement Accounts; and * Easing restrictive passive-income and bank-director share rules.
One issue that Eggers does have to deal with as a
Subchapter S corporation is the lack of liquidity of its shares.
The 1996 act lifts many of the prohibitive restraints in
subchapter S corporation rules dating back to 1958 and expands the availability of S corporation status to many closely held corporations that previously were ineligible.
Keoghs and SEP-IRAs are available to anyone who is a sole proprietor , in a partnership, or the owner of any unincorporated or incorporated business, including a
Subchapter S corporation.
Specifically, Chairman Thomas' provisions would allow more community banks and small businesses to elect
Subchapter S corporation status.
Chairman Thomas' provisions would allow more community banks and small businesses to elect
Subchapter S corporation status which is a proven means to prevent punitive double taxation," said Paul Merski, ICBA's chief economist and director of federal tax policy.
