Unformatted text preview: us terminates if over half of its shareholders elect to revoke the corporation’s S election. A former C corporation – has accumulated that former earnings and profits carried over from its years as a C corporation and has passive investment and income in excess of 25% of its gross receipts for three consecutive years. Chapter 15 CCH Essentials of Federal Income Taxation 11 of 14 S Corporation Returns
The character of all items of income, deductions, losses, and credits passes through from the corporation to the shareholders in a manner similar to partnerships. manner Chapter 15 CCH Essentials of Federal Income Taxation 12 of 14 Examples of Separately Stated Items
• • • • • •
Charitable contributions Tax-exempt income and Tax-exempt nondeductible expenses nondeductible Foreign taxes Investment expenses Personal expenses paid for Personal shareholder’s benefit shareholder’s Net income (loss) from Net rental real estate activities rental • • • • • • Capital gains (losses) Portfolio income (loss) Section 179 expenses Section deduction deduction Section 1231 gains (losses) Tax credits Tax preferences and Tax adjustments related to the AMT AMT Chapter 15 CCH Essentials of Federal Income Taxation 13 of 14 Transactions between S Transactions Corporations and Shareholders Corporations
Shareholders adjust their initial basis in S corporation stock by the following: • • • • Ordinary income (loss) Separately stated items Additional contributions to the S corporation Distributions from the S corporation Chapter 15 CCH Essentials of Federal Income Taxation 14 of 14...
View Full Document
- Spring '10
- Corporation, S corporation