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Subchapter S Corporations & Estates Trusts as Shareholders

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This course will discuss S corporation taxation, shareholder requirements, and estates and trusts as shareholders.

Economy & Finance
1 of 9
Subchapter S Corporations & Estates/Trusts as Shareholders Presented by Joe Lancaster, CPA
I.S Corporation Taxation II. Who May Be a Shareholder in an S Corporation (IRC Section 1361) A. Individuals B. Estates & Certain Trusts C. Certain Exempt Organizations (Mainly ESOP’s)
III. Estates & Certain Trusts as Shareholders A. Estates 1. No “Bright Line” Time Limit, But Cannot Be Indefinite B. Grantor Trusts 1. Grantor Must Be an Eligible Shareholder 2. Only One Grantor (Spouses Can Count as One) 3. Many Rulings
III. Estates & Certain Trusts as Shareholders C. Certain Testamentary Trusts (Two- Year Rule – Was 60 Days Before 1997) D. Voting Trusts E. Qualified Subchapter S Trusts (QSST’s) F. Electing Small Business Trusts (ESBT’s)
IV. Qualified Subchapter S Trusts (QSST’s) (IRC Section 1361(d)) A. Only One Income Beneficiary (Current Lifetime) B. Corpus Distributions Only to That Beneficiary C. Income Interest Terminates on Earlier of Trust Termination or Beneficiary’s Death D. If Trust Terminates During Beneficiary’s Life, All Assets Go to Beneficiary E. All Income Distributed or Required to be Distributed F. Beneficiary Makes Election G. Treated as Grantor Trust With respect to the S Corporation Stock
V. Electing Small Business Trusts (ESBT’s) (IRC Section 1361(e)) A. Specified Trust Beneficiaries B. No Interest in Trust Acquired by Purchase C. Trustee Makes Election D. Part of Trust Consisting of S Corporation Stock is a Separate Trust E. Taxed at Maximum Rate (IRC Section 641(c))
VI. Relief for Late QSST & ESBT Elections A. IRC § 1362(f) & Revenue Procedure 2013-30 1. All Eligible Requirements Met 2. All Entities Filed Returns Consistent With S Status 3. Relief Requested Within 3 Years & 75 Days of Effective Date B. Flow Chart (next slide)
VI. Relief for Late QSST & ESBT Elections
If you have any questions please feel free to contact Joe at: 214-635-2563 jlancaster@gppcpa.com

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Subchapter S Corporations & Estates Trusts as Shareholders

  • 1. Subchapter S Corporations & Estates/Trusts as Shareholders Presented by Joe Lancaster, CPA
  • 2. I.S Corporation Taxation II. Who May Be a Shareholder in an S Corporation (IRC Section 1361) A. Individuals B. Estates & Certain Trusts C. Certain Exempt Organizations (Mainly ESOP’s)
  • 3. III. Estates & Certain Trusts as Shareholders A. Estates 1. No “Bright Line” Time Limit, But Cannot Be Indefinite B. Grantor Trusts 1. Grantor Must Be an Eligible Shareholder 2. Only One Grantor (Spouses Can Count as One) 3. Many Rulings
  • 4. III. Estates & Certain Trusts as Shareholders C. Certain Testamentary Trusts (Two- Year Rule – Was 60 Days Before 1997) D. Voting Trusts E. Qualified Subchapter S Trusts (QSST’s) F. Electing Small Business Trusts (ESBT’s)
  • 5. IV. Qualified Subchapter S Trusts (QSST’s) (IRC Section 1361(d)) A. Only One Income Beneficiary (Current Lifetime) B. Corpus Distributions Only to That Beneficiary C. Income Interest Terminates on Earlier of Trust Termination or Beneficiary’s Death D. If Trust Terminates During Beneficiary’s Life, All Assets Go to Beneficiary E. All Income Distributed or Required to be Distributed F. Beneficiary Makes Election G. Treated as Grantor Trust With respect to the S Corporation Stock
  • 6. V. Electing Small Business Trusts (ESBT’s) (IRC Section 1361(e)) A. Specified Trust Beneficiaries B. No Interest in Trust Acquired by Purchase C. Trustee Makes Election D. Part of Trust Consisting of S Corporation Stock is a Separate Trust E. Taxed at Maximum Rate (IRC Section 641(c))
  • 7. VI. Relief for Late QSST & ESBT Elections A. IRC § 1362(f) & Revenue Procedure 2013-30 1. All Eligible Requirements Met 2. All Entities Filed Returns Consistent With S Status 3. Relief Requested Within 3 Years & 75 Days of Effective Date B. Flow Chart (next slide)
  • 8. VI. Relief for Late QSST & ESBT Elections
  • 9. If you have any questions please feel free to contact Joe at: 214-635-2563 jlancaster@gppcpa.com