Sting Tax Relief in S. 2020, Tax Relief Act of 2005
On November 18, 2005, the Senate passed S. 2020 by a vote of 64-33.B Section 402 of this bill is similar to a provision introduced as part of the bS Corporation Reform Act of 2005b that would:
- Eliminate the rule that would terminate a companybs Subchapter S tax status if it has excess passive income for three consecutive taxable years;
- Increases the threshold for taxing excess passive income from 25% to 60%; and
- Removes gains from the sales or exchanges of stock or securities from the definition of passive income.
While left out of H.R. 4297, the final version of the reconciliation tax bill, S-Corp continues to work to include this provision in any moving tax bill this year.