Treasury announces delay in proposed effective date of proposal making conversion of "large" C corporations to S corporations and further extends proposal

Article Abstract:

Delays in the enactment of US Dept. of Treasury changes to the tax laws governing built-in gain treatment for large C corporations converting into s corporations raise issues of retroactive tax laws and providing taxpayers with predictable laws. The effective date of this proposal was originally slated to be Dec. 8, 1994, but delays in implementation appear to have pushed the effective date forward to 1997. Taxpayers need to be provided with firm information as to when such laws will be made effective, and potential retroactive application poses a threat to such certainty.

United States, Taxation, Political aspects, Retroactive laws

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Reversing itself, IRS announces multiple S corporations formed to avoid stockholder number limit will be respected

Article Abstract:

The IRS opted for form over substance in its Revenue Ruling 94-43, which establishes that a partnership made up of S corporations is an acceptable means of avoiding the 35-shareholder limit for S corporations. These legal structures, partnerships and S corporations, are forms, and this ruling acknowledges that truth. In the ruling, the IRS justified the change in policy by the fact that administrative simplicity would not be served by restricting such partnerships.

Laws, regulations and rules

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