Larry Brant will be revisiting choice of entity in light of possible tax law changes on the horizon at the 2022 Oregon Tax Institute.
The TCJA reduced the corporate income tax rate to a flat 21%, causing a significant number of S corporations to convert to C corporations. With tax hikes looming on the horizon and other significant changes to the Code, these same corporations, however, may soon find themselves desiring to regain S status. Likewise, depending upon the provisions of the soon to be enacted tax legislation, some S corporations may desire to obtain C corporation status. This presentation will explore the potholes and obstacles that may hinder travel on this two-way road, including the built-in-gains tax, LIFO recapture, excessive passive income, unreasonable compensation, personal holding company status, excessive accumulated earnings, and re-election time restrictions.