Nor Should They.  Here’s Why. 

If tax reform results in a top C corporation rate that is far below the top rate offered to pass through businesses, couldn’t pass-through businesses just switch to C status to access the lower rates?  Put another way, would forcing closely-held pass-through businesses into the C Corporation double tax system improve the tax code and help the economy?  The answer to both questions is an emphatic no.  Here are the main points:

1. It’s the opposite of tax reform.  Forcing businesses into the double corporate tax is effectively “anti-tax reform” in that it would return us …
   
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Marty Sullivan has an interesting post in Forbes this week on the pass through rate challenge, arguing that S corporation shareholders who don’t want to see their taxes go up are being greedy.  He says:

You see, for international competitiveness reasons, tax reform must lower corporate rates, and the traditional way to pay for a corporate rate cut is to rid the code of business tax breaks.  But if business tax credits and deductions are repealed, they’ll be stripped from passthroughs as well.  Passthrough taxes will be raised to pay for tax relief for multinationals.  God forbid, Congress …

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It’s official – the Treasury Department today released a new report announcing they will withdraw the family business valuation rules that had threatened the family business community for more than a year!  Today’s announcement is a big win that will be celebrated by family businesses nationwide.

The report released today was in response to an earlier Executive Order instructing Treasury to identify and address regulations issued by the Department in 2016 that were harmful and/or exceeded Treasury’s authority.  In other words, the 2704 rules.  You can read the whole report here.  The portion addressing the valuation rules reads like …

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The Big Six released their “framework” today and it’s pretty good.  You can read all eight pages here, but key provisions for Main Street businesses include:

• A new, lower pass through tax rate of 25 percent;
• Full repeal of the estate tax; and
• Full repeal of the Alternative Minimum Tax.

Those three provisions represent long-time priorities of the Association and we applaud the Big Six for including them.  As S-Corp President Brian Reardon commented:

“Today’s release is good news for Main Street businesses and the families that work for them.  The Framework announced this morning would help Main Street …

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