This course comprehensively reviews the laws and regulations impacting S corporations. Get updated on the IRS' compliance campaign that targets the improper reporting and calculations of stock basis and distributions. Learn to calculate and report critical S corporation tax items that generate most IRS audit adjustments correctly. Topics cover issues include S corporation qualifications, making and keeping the S election, reasonable compensation, taxation of distributions, the use of Qualified Subchapter S Subsidiaries, allocation of annual operating income and loss, tax reporting elections and learning the proper method to calculate the basis of stock and debt amounts.
Learning Objectives
• Identify how to form a qualified entity and elect S corporation status
• Determine how to properly allocate income and loss items to shareholders on their individual Schedule K-1
• Calculate an S corporations” initial basis in its assets as well as a shareholder's stock and debt basis in the S corporation
• Recognize three main reasons for calculating a shareholder's basis in an S corporation and how to make annual adjustments to a shareholders” stock and debt basis
• Ca lculate AAA and OAA account for an S corporation under various scenarios
Major Topics
• Learn how to qualify and to make the S corporation election
• Determine how to calculate initial and annual stock and debt basis amounts and the three reasons why they are maintained
• Understand the four loss limitation rules applied on the shareholder’s individual income tax return (i.e., basis, at-risk, passive, and excess business loss limitations)
• Understand the proper tax treatment and reporting of a distribution from the S corporation to a shareholder
• Determine how to calculate AAA and OAA account for an S corporation as well as the 3 potential taxes
• Determine the impact of health insurance, the net investment income tax, qualified business income tax deduction and unreasonable compensation issues on the reporting function of the S corporation
