Subchapter S Planning

Our experienced Partners provide tax planning, structuring, and compliance issues for U.S. entities that have elected to be characterized as an “S-Corporation” for U.S. federal income tax purposes.

Our attorneys work closely with individuals and their accountants to structure business operations so they can be executed in a tax efficient manner.   Our services don’t stop there, once a plan is implemented, we provide the client advice in the areas of tax review, compliance, reporting and controversy.  We provide services to clients ranging from individuals just starting business to multi-million-dollar S Corporations.  The following is a representation of the type of projects we have recently handled:

  • Consulted with small business owners as to the tax advantages and disadvantages of electing to classify their entities as S-Corporations, Partnerships or Schedule C enterprises.
  • Advised clients on how to issue incentive shares for employees without inadvertently terminating the company’s S Corporation status.
  • Guided owners on the risks of paying dividends verse salary and the related employment tax liability consequences.
  • Drafted company legal documentation as to be compliant with the requirements for the company to make the Subchapter S election.
  • Planned for the termination of an S Corporation by providing clients with advice on the capital verse ordinary treatment of liquidating distribution of assets verses the S Corporations sale of property followed by a distribution of liquidated proceeds.
  • Advised clients on the benefits and pitfalls of utilizing qualified S Corporation subsidiaries (“Q-Subs”) to separate distinct trades and business into separate legal entities while maintaining the income tax flow through benefits of the S Corporation structure.
  • Planned and implemented a strategy to acquire the rollover interests of S-Corporation owners in a combination of share and asset acquisitions.

 

We are always monitoring changes in tax law to discover new opportunities for our clients.  For example, United States domestic tax laws involving S Corporations have changed significantly since the 2017 Tax Cut and Jobs Act. A sampling of some of the recent federal tax changes that affect or have affected such companies includes:

  • 20% deduction for certain pass-through income.
  • Repeal of the deduction related to domestic production activities.
  • New Excess Business Loss rules.
  • Modified NOL rules.

 

Additionally, US state and local tax laws in varying degrees conform (or do not conform) with the foregoing federal laws adding further to the challenges to any S Corporation tax planning and compliance. State and local governments are facing increasing budget pressures leading to more audits and scrutiny of taxpayer positions.  And the US federal tax laws are still evolving through ongoing regulation, rulemaking, and court decisions.

Culhane Meadows brings a team of experienced tax law partners working in various areas of tax law to help each client plan for and comply with the S Corporation tax laws that may be applicable to the client’s situation. Our partners work to keep current with tax law changes through ongoing study.

We look forward to hearing from you with your tax compliance and planning questions to see if we can be of service to you. Below is some additional information about our S Corporation tax practice.


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