Surgent's Understanding S Corporation Taxation: Shareholder Basis, AAA, and Retained Earnings

Overview

Even though they have been around for several years, the tax laws pertaining to S corporations remain some of the more difficult areas of the Internal Revenue Code. Given the rising popularity of S corporations, understanding how shareholder basis and the equity section of the balance sheet work together for tax purposes is imperative for nearly any tax practitioner. In this course, we will discuss this relationship. Using examples and illustrations, we will show how contributions, operating transactions, and distributions affect shareholder basis as well as equity.

Highlights

S corporation earnings layers
Observations on earnings layers
S corporation basis calculation
IRC 351 transactions
Four loss tiers
Appreciated property distributions

Prerequisites

None

Designed For

CPAs and tax practitioners who work with S corporation business clients and S corporation shareholders

Objectives

Recognize the formula for calculating S corporation shareholder basis
Identify the items of income and deduction that are allocated to AAA, PTI, AE&P, and OAA
Calculate the tax effects of a distribution on shareholder basis and AAA