Senators John Thune (R-SD) and Ben Cardin (D-MD) today introduced S. 2156, the 2019 version of the S Corporation Modernization Act. The new Modernization Act focuses on leveling the rules between S corporations and other business forms while increasing the opportunity for S corporations to raise capital. Among other items, the bill would:
- Provide meaningful relief from the so-called “Sting Tax” passive income rules;
- Expand the ability of IRAs to invest in S corporation banks; and
- Level the tax-treatment of asset sales with sales of S corporation stock.
As the Senators noted at the introduction:
“While I believe we’ve made a great deal of progress toward strengthening the tax code for families and businesses, I think there is always more that Congress can and should do to help further modernize it, the boundaries of which are constantly being tested by innovation and entrepreneurship,” said Thune. “S corporations are located in nearly every single city and town across America, particularly in those throughout rural America, which is why it’s important for our tax code to keep up with these businesses and the communities in which they operate.”
“S Corporations, which employ more than 600,000 Maryland workers, are critical to the well-being of the Maryland economy and support thousands of middle class families,” said Cardin. “I’m pleased to work with Senator Thune on this bipartisan legislation that will spur investment in S Corporations so they can better attract capital, innovate, invest in their communities and create jobs.”
Over the years, numerous provisions from the Modernization Act have been enacted into law, including provisions to permit overseas investment in S corporations and increased charitable deductions that were included in the Tax Cuts and Jobs Act of 2017.
S Corporation Association President Brian Reardon thanked the Senate sponsors for their longtime support of the S corporation community. “We are fortunate to have strong leadership in the Senate on S corporation issues” Reardon noted. “Senators Thune and Cardin have demonstrated unwavering support for Main Street businesses, and we look forward to working with them to seeing these provisions enacted into law this Congress.”
S-Corp is working with sponsors in the House to see a companion bill introduced soon.