Uncategorized - The S Corporation Association

S-Corp Concerns with Senate Tax Reform Bill

Top Line

The Framework and rhetoric leading up to its release indicated that Senate Leadership and the Finance Committee were committed to treating the millions of companies organized as pass-through businesses fairly in relation to C corporations. The Framework explicitly called for a rate differential of five percentage points, while previous Finance Committee work focused on leveling the playing field between C corporations and pass-through businesses by eliminating the double corporate tax and moving the entire business community towards a single, reasonable level of tax on all businesses.

Unlike much of the business community, S-Corp fully supported both efforts and expressed that …

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admin2021-08-16T14:02:12+00:00November 11, 2017|

House Tax Reform and S Corps, Part II

The Ways and Means Committee is likely to wrap its tax reform markup today. The bill presents many challenges to pass-through businesses that are unlikely to be fixed today. Here are some quick hits on what we’re seeing.

Reality v. Rhetoric

We continue to hear from S corporations who believe they will get a 25 percent tax rate under this bill. As we reported earlier this week, most businesses won’t see anything even close to the 25 percent rate. Part of the confusion is the rhetoric coming out of Congress. For example, here’s one description from the House:

That’s not …

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admin2019-01-31T22:46:38+00:00November 9, 2017|

House Bill & S Corps

The House tax reform bill to be considered this week has a headline top rate of 25 percent for S corporations and other pass-through businesses, but in many cases the real rate is significantly higher. S corporation owners need to pay attention.

Here are some of key details:

Professional Services: First, the 25 percent rate doesn’t apply to professional service businesses. Specifically, the bill excludes businesses engaged in “the performance of services in the fields of health, law, engineering, architecture, accounting, actuarial science, performing arts, consulting, athletics, financial services, brokerage services, any trade or business where the principal asset of such …

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admin2021-08-16T14:02:16+00:00November 6, 2017|

Can Main Street Businesses Just Convert? No!

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:

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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admin2019-01-31T22:48:47+00:00October 26, 2017|

Pass Through Fallacy and Responses

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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admin2019-01-31T22:48:47+00:00October 18, 2017|