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Unformatted text preview: S-corporations Basis same rules as Partnership But no basis for corporate liabilities Conduit losses Loss not allowed if Greater than basis Greater than at-risk (basis less share of non-recourse loans in basis) Passive (can only use against passive income) Entity Distributions Sole proprietorship – no effect Partnership: Tax-free to extent of basis Gain when distributions > basis If property distributions > basis in partnership, reduce basis of property Corporation Distributions are dividends Generally, taxable to shareholder, not deductible by corporation No effect on basis Dividends: Taxable to extent of current and accumulated earnings and profits If in excess of earnings and profits – reduce basis in stock and no tax, capital gain to the extent exceeds basis S-Corporation Distribution in excess of basis = capital gain Income-splitting Children as employees Wages must be reasonable to be deductible Family entities...
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This note was uploaded on 02/20/2009 for the course H ADM 422 taught by Professor Lhensley during the Fall '08 term at Cornell.
- Fall '08