- 19 - of certain reorganizations and the like. See sec. 1371(c)(2); see also Eustice & Kuntz, Federal Income Taxation of S Corporations, sec. 8.08[8][b], at 8-62 (3d ed. 1993).16 Bonnevista and Castle Towers each elected S corporation status sometime after their incorporation. We infer that each corporation was a C corporation before electing S status. Moreover, Bonnevista was an S corporation for taxable years prior to 1983. Petitioners have failed to show that Bonnevista and Castle Towers did not have accumulated earnings and profits arising from their C corporation operations before electing S status, that Bonnevista had no accumulated earnings and profits from S corporation operations for taxable years prior to 1983, or 15(...continued) under the subchapter S rules in effect before revision in 1982, a corporation electing subchapter S for a taxable year increased its accumulated earnings and profits if its earnings and profits for the year exceeded both its taxable income for the year and its distributions out of that year’s earnings and profits. As a result of this rule, a shareholder may later be required to include in his or her income the accumulated earnings and profits when it is distributed by the corporation. The 1982 revision to subchapter S repealed this rule for earnings attributable to taxable years beginning after 1982 but did not do so for previously accumulated S corporation earnings and profits. 16 In 1996, Congress eliminated certain pre-1983 accumulated earnings and profits for certain S corporations that existed before 1983, effective for the first taxable year beginning after Dec. 31, 1996. See Small Business Job Protection Act of 1996, Pub. L. 104-188, sec. 1311, 100 Stat. 1755, 1784. Accordingly, this legislative provision is inapplicable to the instant case.Page: Previous 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Next
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