Tax Services:

S Corporations

Most privately owned businesses in the United States are organized as S corporations. Since 1985, in order to simplify the taxation of S corporations and their shareholders, the United States Congress has legislated many changes in the way these entities are treated for tax purposes. Over this same time period, the Internal Revenue Service has issued a plethora of Treasury Regulations and rulings that pertain to S corporations. These changes have presented owners of S corporations with complexity as well as opportunity. Sisterson is a firm that is experienced and well prepared to meet these challenges.

Because of our private company focus, we are thoroughly experienced and well qualified to guide business owners through the complex maze of federal and state tax laws that pertain to S corporations including the following issues:

• Evaluation of options for a business entity and related tax implications
• Uses of Qualified Subchapter S Trusts (QSST)
• Uses of Electing Small Business Trusts (ESBT)
• Income and estate tax implications of shareholder agreements
• Capitalization issues, including the use of non-voting stock, and compliance with the “one class of stock” rule
• Planning for the contribution of appreciated or encumbered property
• Permissible shareholders and determining the number of shareholders
• Election to be taxed as an S corporation and evaluation of exposure to built-in gains tax and LIFO recapture tax
• Use and implications of creating “Qualified Subchapter S Subsidiaries” (QSSS)
• Transactions with related parties
• Avoiding loss limitations imposed by the “at risk” and “passive activity” rules
• Planning for the distribution of appreciated or encumbered property
• Planning for shareholder utilization of start-up or operating losses through debt
• Planning for repayments of “zero basis debt” to shareholders
• Gifts of stock