Tax update: S elections, PTE, and Sec. 1202
EY’s Tony Nitti, CPA, shares a preview of general business update topics before his presentation at ENGAGE.
S Corporation Income Taxation
Schedules K-2 and K-3 e-file capability postponed for S corporations
The IRS delays e-filing capability for schedules reporting S shareholders’ items of international tax relevance, earlier forecast for mid-June, to July 24.
More Schedule K-2 and K-3 FAQs posted
In eight new FAQs on its website, the IRS covers some special issues, including several that it says will be added to the forms’ instructions.
IRS waives estimated-tax penalties for farmers and fishermen
The IRS, citing earlier problems e-filing a new form reporting S corporation owners’ basis, has granted relief to certain farmers and fishermen who missed their March 1 filing deadline.
Partnerships and S corps. can deduct state and local taxes
The IRS said it would issue proposed regulations allowing S corporations and partnerships to deduct “specified income tax payments” paid to state and local governments above the line and not as passthrough items for partners and shareholders.
Settlement agreement’s capital gain allocation withstands challenge by IRS
The Tax Court finds a payment was for repudiated joint venture interests, not future income.
Final regs. govern eligible terminated S corporation rules
The IRS finalized proposed regulations on eligible terminated S corporations, a new provision enacted under the Tax Cuts and Jobs Act that provided favorable treatment for corporations that wished to terminate their S elections.
Regulations coming on S corporations with accumulated E&P and GILTI
The IRS announced that it will issue regulations to allow S corporations with accumulated earnings and profits to elect to have global intangible low-taxed income inclusions increase the S corporation’s accumulated adjustments account.
AICPA requests clarity on Sec. 465 reporting relief
The AICPA has asked Treasury and the IRS to clarify that reporting relief on certain reporting under Sec. 465 will also apply to S corporations.
Start or review an accountable plan
Employees’ business expense reimbursements are excluded from gross income.
Business tax quick guide — tax year 2019
Download and print this quick guide for use during tax season, and look for our quick guide for individual taxpayers in the January 2020 issue.
Relief for ESBT election failure saves S corporation’s status
An IRS letter ruling allowed an otherwise qualified corporation to continue to be treated as an S corporation for federal income tax purposes despite its inadvertent termination of its S corporation status.
AICPA seeks guidance on adjustments for conversions from S corp. to C corp.
In comments submitted to the IRS, the AICPA requested expeditious guidance concerning adjustments attributable to conversions from an S corporation to a C corporation.
W-2 wages and Sec. 199A
Finding the “sweet spot” to maximize the qualified business income deduction may involve adjusting a business’s workforce.
S corp. expenses not personally deductible by shareholder as a sole proprietor
A district court denies a taxpayer's refund claim.
Distribution by former S corporation is part dividend
The IRS ruled that a distribution to the sole shareholder of a C corporation was partly a recovery of the former S corporation’s accumulated adjustments account (AAA) and a taxable dividend for the remaining distribution.
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.
