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Essay specific features
Written by:
Gary H
Date added:
September 18, 2015
Level:
University
Grade:
A
No of pages / words:
6 / 1472
Was viewed:
955 times
Rating of current essay:
Essay content:
Passive Income
2. Built in Gains
Passive Income
- S Corp that has subchapter C earnings and profit
- S Corp with passive income
o Gross receipts exceed 25 percent of passive activity (pay income tax)
o Gross receipts exceeds 25 percent for 3 years (S Corp termination)
Built in Gains
- Conversion from C Corp to an S Corp
- Any appreciated assets as date of conversion are called Net Built in Gain
o Within 10 years if you sell assets you are subject to tax
Subsection 1363(b)- S Corporations taxable income is calculated in the same manner as an individual
Exceptions to 1363(b):
- Personal Exemptions under Section 152 are not deductible
- Charitable Contributions under Section 170 are not deductible
- Any additional itemized deductions (medical)
Taxation at Shareholder Level
Subsection 1366(a)- all items of income, deduction, loss, and credit recognition by S Corp are passed through to the shareholder
Knott v...
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Commissioner TC Memo 1991-352
- Shareholders are taxed on their allowable share of income even if not distributed
Subsection 1366(b)- Character of any item included in a shareholder pro-rata shares shall be determined as if it we realized directly from the source and incurred in the same manner as a corporation
Exceptions to 1366:
- Regulation 1...
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