Is it time to give the S corporation a proper burial?

Article Abstract:

The availability of pass-through income taxation for limited liability partnerships and limited liability companies has made S corporation entity classification nearly obsolete, and Congress should consider repealing subchapter S entirely. All subchapter S entities should be allowed to convert into subchapter K entities through tax-free transition rules. The transition would include ending the availability of the S corporation election and, subsequently, requiring all S corporations to liquidate and reform as subchapter K entities.

Limited liability companies, S corporations

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The partnership allocation rules of section 704(b): to be or not to be

Article Abstract:

IRS substantial economic effect regulations under IRC section 704(b), which determine partnership basis allocations, should not be eliminated and replaced with less complex rules. The substantial economic effect rules are specific to equity investments and recourse and nonrecourse debt. They are established rules clarified and supported by administrative and judicial interpretations. A preferable reform would be to overrule with legislation Crane v. Commissioner's inclusion of nonrecourse debt in bases allocations.

Tax Law, Public Finance Activities, Partnerships, Accounting and auditing, Basis (Taxation), Nonrecourse debt, Allocation (Accounting)

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Time after time: selling a partnership interest under the installment method

Article Abstract:

Using the installment sale method for sale of partnership interests requires considering the assets held by the partnership, which characterization rules are applicable and how to value assets. The installment sale rules of IRC section 453 are applicable to partnership sales but may be limited by the presence of disallowed assets. Under section 751, gain recognition will occur based on the aggregation approach if inventory or unrealized receivables are present.

Tax accounting, Installment contracts

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