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Flashcards in Taxes: Income & Basis Deck (5)
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1

Taxes:
Income & Basis
Operating Rules

Operating Rules
- S Corp: year end consistent with shareholders
- Calendar year-end is general default
- may elect another if no more than 3 months of deferral

2

Taxes:
Income & Basis
Reporting Operations

Reporting Operations
- may use cash basis unless tax shelter
- reports TI and separately stated items on K-1
- not entitled to most corporate deductions
- don't pay AMT, PHC, or ACE
- S corp's use tax elections

3

Taxes:
Income & Basis
Flow-Through to Shareholders

Flow-Through to Shareholders
- if interest changes during year, calc on daily basis
= (annual income / days in year)*days prior to change*interest

4

Taxes:
Income & Basis
Adj Basis

Adj Basis
+ contributions of capital
+ share of income
- distributions to shareholder
- share of loss

5

Taxes:
Income & Basis
Loss Limitations

Loss Limitations
1. limited to adj basis of stock
2. adj basis of loans to corp can be used after adj basis of stock is exhausted
3. "at risk" limitations
4. passive loss limits also limit deductions
- unused losses are carried forward indefinately

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