Good news! The 2017 version of the “S Corporation Modernization Act” has been introduced the House and the Senate. Led by Senators Thune (R-SD) and Cardin (D-MD) and Representatives Reichert (R-WA) and Kind (D-WI), the bill calls for needed updates to the rules governing S corporations, some of which date back over 50 years!
- You can see the entire bill here
- You can see the section-by-section analysis here
- You can see the S-Corp press release here
- You can see the Thune/Cardin release here
Today’s introduction comes at a critical juncture in the legislative calendar. The House of Representatives is pulling all the stops to vote on their health care reform package this week, with a showdown vote planned for this afternoon. Whether it passes or not, we expect the House to shift its attention to taxes and the House Blueprint tax reform package.
Which is where our S Corporation Modernization bill comes in. As S-Corp readers know, key provisions from past S Corporation Modernization Acts have moved through Congress and been signed into law, most recently the shorter 5-year recognition period for built-in gains, which was made permanent just over a year ago. Our hope is that large tax bill like that contemplated in the House would have enough room to accommodate all the provisions of this year’s S Corp Mod bill. Key changes in this version relative to past efforts include:
- Moving the Nonresident Alien provision up to the top slot – it is time for direct foreign investment to be available to S corporations; and
- Including the new internal basis adjustment provision to ensure that S corporation assets receive similar treatment as partnerships.
As in the past, Senators Thune and Cardin and Representatives Reichert and Kind are championing the cause. All four members do a great job representing Main Street on the Finance and Ways and Means committees, so America’s 4.7 million S corporations couldn’t have a stronger team of advocates. We really appreciate the hard work the members and their staffs put in to get the provisions just right.
The legislative outlook remains hopeful and we’ll be working closely with our legislative champions to ensure that if a big tax bill moves this year, these provisions will be part of it.