The Nitti Gritty on S Corporation Basis and Distribution Ordering Rules

General Description:

When an S corporation makes a distribution, the tax treatment to the shareholders can either be extremely straightforward, or extremely complicated, with vitually no in-between. This class will help save tax preparers precious time by identifying the right questions to ask before trying to determine the taxability of an S corporation’s distributions, so you don’t go down the wrong path. We will then journey down both paths – both simplex and complex – and discuss the rules for reaching the right answer. In the process, we’ll learn about S corporation stock basis, corporate E&P, and perhaps the most misunderstood concept in all of subchapter S – the Accumulated Adjustments Account.

Learning Objective:

After completing this course the participant will be able to:

• Identify the role C corporation E&P plays in determining the taxability of an S corporation’s distributions.
• Recognize the difference between shareholder stock basis, corporate E&P, and the accumulated adjustments account.
• Analyze the ordering rules for adjusting stock basis and the accumulated adjustment account, and how that order impacts the taxability of distributions.

Instructors:

Anthony J. Nitti, CPA, is a partner in RubinBrown's Tax Services Group. Tony is one of the premier continuing education instructors in the country and a well-known contributor of tax content to Forbes. He has 20 years of accounting and tax experience, including working in the tax departments of Arthur Andersen LLP, Price Waterhouse LLP, and, most recently, Withum. He focuses primarily on corporate and partnership tax planning, with a special focus on the consolidated return regulations and the reorganization provisions, including the structuring of acquisitions, mergers, reorganizations, spin-offs and other restructuring transactions. He earned a bachelor's degree in accounting from The College of New Jersey and a Master of Taxation degree from the University of Denver Graduate Tax Program. Follow Tony on Twitter @nittiaj.

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