Abstracts » Business

New rules conform S corp. and partnership income

Article Abstract:

The IRS has released final Regulations that clarify the provisions of Section 179 regarding the expensing of depreciable assets. The regulations allow S corporations to calculate net income without considering shareholder compensation, thus bringing the treatment of such compensation in line with that of guaranteed payments received by partners. With respect to the limits placed on taxable income, the regulations adjust the definitions of S corporation and partnership income to allow consistent results to be achieved for both entity types. The regulations also elaborate on the treatment of losses and deductions, as well as the treatment of carryovers. They become effective for property put into use in the taxable years before Jan 25, 1993.

S corporations

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Stock distributions by partnership can result in gain

Article Abstract:

Proposal Regulations (PS-91-90) have been issued by the IRS to stop corporations from using stock distributions from partnerships as a way to avoid recognizing gains derived from distributions of appreciated property. The proposed regulations elaborate on the requirements governing gain-recognition as specified under Section 311(b) and Notice 89-37, 1989-1 CB 679. The proposed regulations, which come into effect for all transactions after Mar 9, 1993 cover deemed-redemption, distribution, de minimis and inadvertence rules.

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