Liquidating trust eligible shareholder s corporation

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In June’s Tax News, we discussed the differences in the formation of an LLC (state law) versus an S corporation (federal election) and provided a chart showing some of the different forms these two business entities would file.

In this article, we will discuss the effects on taxation.

Eligible former shareholders are those who timely submitted relevant documentation, including the release required under Section 41.6 of the Plan.

As of the Effective Date of the Plan, Depository Trust Company ("DTC") established and maintains positions in the Escrow CUSIPs.

There are several major federal income tax advantages of operating as an S corporation instead of as a regular C corporation.

These advantages include: Not all corporations may elect S status.

LLCs and S corporations can both provide for pass-through treatment.

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Thus, items of income, gain, loss, deduction and credit, the separate treatment of which could affect the tax liability of a shareholder, must be passed through separately to each shareholder.

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This article presents an overview discussion of the taxation of S corporations and their shareholders.

While S corporations are corporations for purposes of state law, they are taxed much like partnerships for federal (and, in many cases, state) income tax purposes.

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