S Corporation Income Taxation

What CPAs need to know about Sec. 199A guidance and SSTBs

One of the areas that accountants are most interested in regarding tax reform is Sec. 199A guidance — and, more specifically, how the deduction for qualified business income relates to a specified service trade or business. Tony Nitti, CPA, addresses some popular questions on that topic.

Income omission triggers 6-year limitation period

Reporting of some S corporation gross receipts is not adequate disclosure of all receipts, the Tax Court holds.

The new QBI deduction is finally clearer

Proposed regulations issued on Sec. 199A bring welcome guidance.

S corporation shareholder may not revoke tax election

The Tax Court declines to create a precedent and allow an individual S corporation shareholder to unilaterally and retroactively revoke the corporation's election.

Levy on husband-and-wife LLC is upheld

Taxpayers' claim they were a single-member limited liability company is belied by partnership returns, the Tax Court concludes.

Mechanics of the new Sec. 199A deduction for qualified business income

This article reviews several scenarios in which certain individuals could take advantage of a new Internal Revenue Code provision to significantly lower their taxes.

Carry your losses (further) forward

New rules limit utilization of net operating losses.

S corp. basis and why it’s important

Loans must qualify as “bona fide debt” to create basis for deducting passthrough losses.

Deductions disallowed for operator of Larry Bird’s former house as a B&B

The French Lick, Ind., property was used for personal purposes more than 14 days per year, the Tax Court holds.

Loan guarantees do not increase S corporation shareholder’s basis

The guarantees lacked any economic outlay, the Tax Court holds.

Boston Bruins can deduct full cost of meals for team’s away games

The Tax Court held that the owners of the Boston Bruins could deduct the full cost of their team’s pregame meals for away games as a de minimis fringe benefit.

S corporation’s sole owner had unreported income but not constructive dividend

The Tax Court cites a lack of earnings and profits.

LLC’s sole member is held liable for employment taxes

An LLC is treated by default as a disregarded entity, the Tax Court holds.

S corporation’s payments on its owner’s behalf are held not to be wages

Despite a lack of promissory notes, interest, or repayment terms, the Tax Court treats an owner's advances to his business as loans and its payment of his personal expenses as repayments.

Forfeited deposits are ordinary income

Income from forfeited deposits of terminated contracts related to Sec. 1231 property is not eligible for capital gain treatment under Sec. 1234A.

Helping S corporations avoid unreasonable compensation audits

The IRS aggressively audits S corporations to make sure they do not disguise compensation as distributions to shareholders. Here’s what tax preparers need to know to avoid red flags in S corporation returns.

Sec. 4980D excise tax relief is available for certain small employers

IRS gives limited transition relief for employer payment plans and 2% S corporation shareholder arrangements.

FASB proposes two changes to simplify accounting for income taxes

FASB proposed two standards changes that are designed to reduce complexity in accounting for income taxes.