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REG 44.2-S Corp income and basis
Terms in this set (11)
General treatment of S Corp income?
Flow through exactly the same as partnership (separately state items to the face of the 1120 S, remaining items lumped together) except need to use S Corp formula to allocate income items
Income and deductions retain their character from the S Corp to the shareholder (as with partnerships)
Formula used to allocate income items?
Income item x ownership x portion of year owned
Loss limitations for S corps?
Losses are limited to the shareholders stock basis and loan basis; excess losses are carried forward indefinitely
Shareholder loans made directly to the S Corp
Treatment for basis when there is income subsequent to a year that stock and loan basis is reduced?
Loan basis is increased first, then stock basis
Differences in finding shareholder basis for S Corp versus a partnership?
No increases or decreases for debt of the S Corp;
Increases for "stock purchases" rather than contributions
Decreases for AAA distributions
Find S corp shareholder basis?
Must be adjusted in the following order:
+ stock purchases
+ all income (taxable or not)
- AAA distributions
- all expenses (deductible or not)
What tax effects do shareholder-employees of a corporation need to consider for fringe benefits?
Imposed on greater than 2% shareholders on any day during year;
Most fringe benefits are included in income. Accident and health premiums are included as fringe benefits
Taxable year of S Corp?
Calendar year is default;
May use fiscal if used by more than 50% of shareholders;
Can elect a fiscal year with IRS permission if business reason
Treatment of gains and losses from distribution?
Gains recognized by shareholder, losses not recognized
List the four limits on S Corporation shareholders for flow-through of losses
Adjusted basis of stock;
Adjusted basis of loans to corporation once stock basis exhausted;
May only deduct losses to extent at risk;
Passive loss limits
Sets with similar terms
Chapter 22: S Corporations
Tax Planning: Basis
Other sets by this creator
REG 45-Federal Estate Tax
REG 46-Fiduciary taxation
REG 44.3-S Corp Distributions and special taxes