Single class of stock rules eased in new regs
Article Abstract:
The IRS has issued proposed regulations that liberalize the single class of stock (SCOS) rules covering S corporations. The new regulations substantially reduce the possibility of inadvertent termination of S corporation elections and are intended to replace the original SCOS rules issued in Oct, 1990. The proposed regulations apply to taxable years beginning after 1991 and address the questions of what constitutes outstanding S corporation stock and who owns stock in an S corporation. The impact of the regulations on shareholder distributions, state law requirements, and buy-sell agreements are discussed and it is concluded that they provide fair treatment to small businesses by taking into account real problems commonly faced.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1991
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One-class-of-stock regs. made final with few changes
Article Abstract:
Regulations TD 8419 that impose a one-class-of-stock requirement on S corporations were recently made final by the IRS. These regulations define a corporation with only one class of stock as that of which outstanding shares give the same rights to distribution and liquidation proceeds, and which is not involved in any transaction that can be considered as a second class of stock. The final regulations will take effect for taxable years starting after Aug 27, 1992, except in cases where instruments, obligations or agreements were settled prior to May 28, 1992 and whose material items were not altered after the said date.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1992
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When will the IRS allow re-election of S corporation status?
Article Abstract:
Regulation 1.1362-5 allows the re-election of S corporation status if it can be proven that the termination of S Status was inadvertent and that the loss of S Status was not motivated by tax avoidance. The IRS is likely to recognize a termination as being inadvertent if one of three circumstances can be proven. These are if ownership of over 50% of the stock changes after the termination, if the termination were the result of factors beyond the control of the company and its shareholders, and if the election of S status was invalid in the first place.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1993
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