Built In Cap Gains: Converting C Corp to S Corp
Date: December 8th, 2021 2:00 - 4:00pm ET
IRS Program #: X9QQU-T-00799-21-S/O
Speaker: Marcus Dyer, EA
Avoiding the Pitfalls of Built-in Capital Gains Tax (converting from C to S Corporations)
This topic is the subject of an IRS audit campaign
Converting from C corporation to S corporation status can benefit many companies from tax and operation standpoints. C corporation owners can convert their company to an S corporation without triggering an immediately taxable transaction in most cases. However, several potential tax traps can arise in a conversion if not properly planned. One of the most frequent and costly tax implications of a C-to-S conversion is the built-in-gains (BIG) tax of Internal Revenue Code Section 1374.
Taxable BIG occurs when an S corporation sells or distributes certain specified assets within five years after its conversion date from C corporation status, or when a converted S corporation acquires assets with a carry-over basis from a predecessor C corporation. Because the BIG tax is imposed at the top tax rate for corporations, tax advisers should look closely at asset planning before completing the S corporation conversion. This course provides guidance on how tax practitioners can help their clients avoid the pitfalls of BIG tax.
After completing this course attendees will be able to:
- Recognize when the built-in gain tax could apply.
- Learn how to Calculate the built-in gain tax
- Understand the importance of valuation analysis of corporate assets subject to BIG tax
- Identify tax planning techniques to minimize or eliminate the built-in gain tax.
This course qualifies for IRS Continuing Education Hours. NAEA reports IRS CE on a monthly basis. If you have not received your CE Hours in your IRS PTIN Account by the end of the month after receiving the certificate, please contact NAEA at firstname.lastname@example.org.
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