S.758 - S Corporation Reform Act of 1995104th Congress (1995-1996)
|Sponsor:||Sen. Hatch, Orrin G. [R-UT] (Introduced 05/04/1995)|
|Committees:||Senate - Finance|
|Latest Action:||Senate - 06/19/1995 Subcommittee on Taxation & IRS Oversight. Hearings held. (All Actions)|
This bill has the status Introduced
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Summary: S.758 — 104th Congress (1995-1996)All Information (Except Text)
Introduced in Senate (05/04/1995)
TABLE OF CONTENTS:
Title I: Eligible Shareholders of S Corporation
Subtitle A: Number of Shareholders
Subtitle B: Persons Allowed as Shareholders
Subtitle C: Other Provisions
Title II: Qualification and Eligibility Requirements for S
Subtitle A: One Class of Stock
Subtitle B: Elections and Terminations
Subtitle C: Other Provisions
Title III: Taxation of S Corporation Shareholders
Title IV: Effective Date
S Corporation Reform Act of 1995 - Title I: Eligible Shareholders of S Corporation - Subtitle A: Number of Shareholders - Amends the Internal Revenue Code to increase from 35 to 50 the maximum number of shareholders of an S corporation (electing small business corporation). Allows members of a family to be treated as one shareholder.
Subtitle B: Persons Allowed as Shareholders - Allows the following entities to be shareholders of S corporations: (1) certain tax-exempt organizations; (2) financial institutions that do not use the reserve method of accounting for bad debts; (3) nonresident aliens; and (4) certain small business trusts.
Subtitle C: Other Provisions - Extends the post-death qualification for certain trusts to be permitted as shareholders from 60 days to two years.
Title II: Qualification and Eligibility Requirements for S Corporations - Subtitle A: One Class of Stock - Allows an S corporation to issue qualified preferred stock.
Permits financial institutions to hold safe harbor debt.
Subtitle B: Elections and Terminations - Revises the rules on inadvertent terminations by certain trusts of the election to be an S corporation. Authorizes the Secretary of the Treasury to treat certain late elections as timely and to provide an automatic waiver procedure for certain inadvertent terminations.
Expands the post-termination transition period until 120 days after a determination is made that the election had terminated in a prior year.
Repeals the characterization of excessive passive investment income as a termination event.
Increases the tax imposed on such excessive income.
Subtitle C: Other Provisions - Permits an S corporation to wholly own the stock of a subsidiary.
Provides for the treatment of distributions during loss years.
Provides a consent dividend for S corporation elections to by-pass amounts in the accumulated adjustments account when making distributions.
Eliminates the rule treating an S corporation as an individual in its capacity as shareholder of another corporation for purposes of subchapter C.
Eliminates the pre-1983 earnings and profits accumulated by a corporation that was an S corporation for any taxable year beginning before January 1, 1983, and is so characterized for its first taxable year after December 31, 1995.
Allows S corporations to make charitable contributions of inventory and scientific property.
Repeals the requirement that partnership rules apply for fringe benefit purposes (making C corporation rules applicable). Provides for the application to two-percent shareholders of S corporations of the rules regarding deduction of health insurance costs of self-employed individuals.
Title III: Taxation of S Corporation Shareholders - Applies the exemption from the excise tax on pension plan prohibited transactions to plans providing benefits for S corporation shareholder-employees (as defined before the effective date of the Subchapter S Revision Act of 1982). Treats losses on liquidations of S corporations as ordinary to the extent the loss created by ordinary income pass-through triggered the liquidation.
Title IV: Effective Date - Makes this Act effective for taxable years beginning after December 31, 1995.