Workout or bankruptcy's effects depend on entity

Article Abstract:

Partnerships and S corporations are taxed differently when they take part in a workout or bankruptcy proceeding. This despite the fact that both are pass-through organizations under which profit and loss issues are addressed on the level of the individual partner or shareholder. For partnerships, income generated through partnership debt cancellation is allocated to the individual partner. On the other hand, debt cancellation income in S corporations is mixed with other profit and loss items which go to the shareholders. Debt restructurings involving reduced principal debt balance will require the recognition of the cancellation-of-debt income. Methods for restructuring debt are term modification, purchase-price reduction, principal reduction and exchange of certain debts or all of the debts for an interest in the entity.

Bankruptcy, Bankruptcy reorganizations, Bankruptcy reorganization

---

Extra care needed for S corporation election

Article Abstract:

The Internal Revenue Code allows for reinstatement of Subchapter S status to corporations when the lapse in Subchapter S qualifications is inadvertent and the company and individuals involved take action to reinstate such status. Three examples of Subchapter S corporations that lost their status are described and discussed; of the three, the Internal Revenue Service allowed a return to Subchapter S status in two cases. The corporation that was not allowed to return to Subchapter S status (in the case of Seely, TCM 1986-216) had lost its status because one of the three individuals involved had failed to receive the written consent of his spouse on the Subchapter S consent form, prior to its filing.

---

Proposed regulations provide guidance on electing or terminating S status

Article Abstract:

Proposed regulations that provide guidance to small corporations attempting to elect, revoke, or terminate S status are reviewed. Election of S corporate status requires consent of certain shareholders, is effective until terminated, and must have the consent of certain shareholders in order to be revoked. An S election is also terminated when the corporation ceases to be a small business corporation, or when it receives excess passive investment income.

Investments

Similar abstracts:

• Abstracts: The Rule 415 experiment: equity markets. The shelf registration of debt and self selection bias. The pricing effects of interfirm cash tender offers
• Abstracts: Purchase and ownership of a residence can provide many tax savings opportunities. Current strategies for obtaining the tax advantages of straddle transactions
• Abstracts: Auditing functions for internal control systems with interdependent documents and channels. A simulation analysis of the power characteristics of some popular estimators under different risk and materiality levels
• Abstracts: Detroit media monitors speak out. In automotive print - the rage is multi pages
• Abstracts: New limits on meal and T & E deductions are effective now even for fiscal-year taxpayers. The format of an employee expense account determines tax treatment of employer, employee

This website is not affiliated with document authors or copyright owners. This page is provided for informational purposes only. Unintentional errors are possible.