Daily Tax Report ®

IRS Tells Entities Becoming C Corps How to Get Tax Law’s Perks

Nov. 4, 2019, 10:06 PM

S corporations that switch to C corporation status got new clarity on the tax treatment of their payments to shareholders as they make the transition.

The Nov. 4 proposed rules (REG-131071-18) outline the requirements for an entity to meet definitions created in the 2017 tax law and receive the associated tax benefits.

  • When an S corporation—a pass-through entity taxed at the individual owner level and subject to myriad restrictions—terminates its S corporation status and becomes a C corporation, its shareholders benefit from that former S corporation status over the following year, the regulations said. A C...
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