Treasury’s Section 385 Regs and S Corps

The business community is beginning to recognize that Treasury’s new Section 385 regulations published on April 4th have a much broader reach than anybody thought.  S corporations in particular need to pay attention.

How broad are they?  Here’s how Tax Notes described a meeting of the ABA Section of Taxation here in DC last week:

Practitioners who specialize in the taxation of S corporations said they’re concerned that many S corps may end up gratuitously losing their S corp status if the new related-party debt rules are applied as written without exception.

Thomas J. Nichols of Meissner Tierney Fisher & Nichols SC said that

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