New regulations allow more real estate corporations to become S corporations

Article Abstract:

The Subchapter S Revision Act of 1982 eased the restrictions for real estate corporations to elect S corporation status, but real estate corporations with prior earnings and profit of more than 25% of passive income were still excluded. However, the Treasury Dept has issued final regulations under IRC section 1362 that redefine rents and therefore reduce the amount of income declared passive for most real estate corporations. Real estate corporations that directly manage their properties can be eligible for S corporation status because the rents are considered active income.

S corporations, Real estate management firms, Passive activity (Taxation)

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The option attribution rules of the Internal Revenue Code

Article Abstract:

The option attribution rules present in various sections of the Internal Revenue Code should be made uniform to provide businesses with greater certainty and to curb abuses efficiently. IRC sections 318(a)(4), 382(h), 544(a)(3), 1507(a)(5) and 1563(e) all contain rules on ownership attribution for options. The multiple sections exist because of the different contexts, employee ownership plans and stock sales, for example, in which options are used. A uniform rule should be narrowly tailored to address taxpayer abuse, and the section 1504 rule provides the clearest guidance.

United States, Taxation, Stocks, Options (Finance)

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