alternative minimum tax - The S Corporation Association

Higher Tax Rates on Horizon

We’ve had numerous conversations in the past couple of weeks with S corporation owners about the tax outlook for the next couple of years, and it’s becoming apparent that the S-Corp community is underestimating the threat of higher tax rates on the horizon. With that in mind, here’s our best assessment of what to worry about, and when to worry about it.

First, in case you have not heard, all the major tax relief provisions enacted since 2001 will expire at the end of 2010 unless Congress acts to extend them. For S corporations, that means higher tax rates on your …

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admin2019-02-06T18:43:59+00:00November 7, 2007|

Taxpayer Expectations and the Rangel Surtax

We have had a chance to digest a bit more of the Rangel bill introduced last week.

There was a lot to digest. Repealing section 199, LIFO, and IC-DISC, while extending the depreciation period for intangibles will all adversely impact our members to one degree or another. The fact that these tax increases are being used to offset a rate cut for C corporations doesn’t help matters.

Focusing on the individual side, the bill would substitute a new four-percent surtax on individuals and businesses earning more than $150,000 in order to offset the cost of repealing the individual Alternative Minimum Tax (AMT).

Whether …

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admin2019-02-06T18:43:59+00:00October 30, 2007|

Chairman Rangel Proposes Payroll Tax Increase on Small and Family-Owned Businesses

When Congress created the S corporation in 1958, the IRS ruled that only S corporation shareholders who are active in their business should be subject to payroll taxes, and then only on amounts received for their labor.

Fast forward fifty years. While the payroll tax has grown dramatically, the application of payroll taxes has always applied to labor income only – not capital income.

Last week, all this changed. House Ways and Means Committee Chairman Charlie Rangel [D-NY] introduced legislation that turns 50 years of tax policy on its head.

The bill, the Tax Reduction and Reform Act of 2007, would lower …

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admin2019-02-06T18:43:59+00:00October 29, 2007|

More Details on the Rangel Tax Bill

At a members briefing this evening, Ways and Means Chairman Charlie Rangel outlined his “Mother of All Tax Bills” to the Committee membership. In essence, he outlined three separate bills that he will introduce in one package:

– A bill to repeal the individual AMT and provide tax benefits for low income families; A bill to extend for one year a group of tax provisions scheduled to expire at the end of 2007, including the temporary AMT “patch”; and
– A bill to cut the corporate tax rate down to 30.5 percent.

As S-Corp readers know, the tax benefits from these three …

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admin2019-02-06T18:44:36+00:00October 24, 2007|

Tax Credit Repeal – Another Hit on S Corporations?

BNA this morning has additional information about the AMT repeal legislation planned to be introduced tomorrow by Chairman Charlie Rangel. Aside from the offsets we mentioned yesterday – rate increase, LIFO repeal, manufacturing deduction repeal – all of which would raise taxes on S corporations if enacted, another potential offset is the repeal of the R&D tax credit. As BNA reports:

“The enticement will be a lower corporate rate but the pay-fors would mean shutting down loopholes,” Neal said. This includes, Neal said, killing the popular research and development tax credit. A one-year extension …

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