S CORPORATIONS REFORMED FOR 2007

摘要

Imagine the liability protection of a corporation and the pass-through tax benefits of a partnership in one entity for your pressure cleaning, supplies, or equipment business. A unique type of business entity, the S corporation, offers its owners or shareholders the limited liability of a corporation while allowing income and deductions to pass-through to the tax returns of the owners or shareholders. Even better, our lawmakers recently 'reformed' the S corporation tax rules making these unique entities more attractive than ever. According to the Internal Revenue Service, over 1.7 million small businesses operate as S corporations. The recently passed, Small Business and Work Opportunity Tax Act of 2007 included a package of S corporation reforms. The changes affect the treatment of passive investment income, partial sales of qualified subchapter S subsidiaries (QSubs), interest deductions by electing small business trusts (ESBT), as well as reduction in earnings and profits (E&P).