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An S corporation (or S Corp), for United States federal income tax, is a closely held corporation (or, in some cases, a limited liability company (LLC) or a partnership) that makes a valid election to be taxed under Subchapter S of Chapter 1 of the Internal Revenue Code. [1] In general, S corporations do not pay any income taxes.
If you run a small business, particularly one that has employees and offers benefits such as a workplace retirement plan, then recent tax changes could affect you this tax filing season. For You ...
This summary is based largely on the summary provided by the Congressional Research Service, a public domain source. [1]The Permanent S Corporation Built-in Gains Recognition Period Act of 2014 would amend the Internal Revenue Code of 1986 to reduce from 10 to 5 years the period during which the built-in gains of an S corporation are subject to tax and to make such reduction permanent.
The proposal would reportedly expand the current tax on these businesses to apply to active owners who make more than $400,000 annually, levying a 3.8% tax on currently untaxed earnings.
[a] S corporations may not specially allocate profits, losses and other tax items under US tax law. The owners of the LLC, called members, are protected from some or all liability for acts and debts of the LLC, depending on state shield laws. In the United States, an S corporation is limited to 100 shareholders, [b] and all of them must be U.S ...
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This act prohibited shareholders from increasing basis for their portions of the S corporation's excluded cancellation-of-debt income, for discharges of indebtedness after October 11, 2001. This effectively overturned the January 9, 2001, U.S. Supreme Court decision to allow such increases in basis in Gilitz v. Commissioner, 531 U.S. 206 (2001).
Rollovers as business start-ups (ROBS) are arrangements in the United States in which current or prospective business owners use their 401(k), IRA or other retirement funds to pay for new business start-up costs, for business acquisition costs or to refinance an existing business.