Advantages of pass-through entities still there

Despite the fact that the top marginal tax rates for individuals are once again higher than the top marginal corporate rates, flow-through entities should remain the entities of choice under the Revenue Reconciliation Act of 1993 (RRA) due to the double taxation associated with C corporations. The R...

Full description

Saved in:
Bibliographic Details
Published inThe Practical accountant Vol. 26; no. 11; p. 27
Main Authors Ludtke, David A, Robertson, Bryan P
Format Magazine Article
LanguageEnglish
Published Boston SourceMedia dba Arizent 01.11.1993
Subjects
C corporations
Capital gains
Dividend distributions
Exclusion
High income
Income taxes
Internal Revenue Code
Liability
Limited liability companies
OBRA 1993-US
Partnerships
Section 482
Small business
Stockholders
Tax elections
Tax rates
Taxable income
Taxation
United States > US
Online AccessGet full text

Cover

More Information
Summary:Despite the fact that the top marginal tax rates for individuals are once again higher than the top marginal corporate rates, flow-through entities should remain the entities of choice under the Revenue Reconciliation Act of 1993 (RRA) due to the double taxation associated with C corporations. The RRA, via Section 1202, permits noncorporate taxpayers to exclude 50% of eligible gain realized on the sale of qualified small business stock. Under Section 469, losses and credits generated by passive loss activities cannot be used to offset non-passive income such as salaries, interest, dividends or income from an active trade or business. Another change made by the RRA can affect certain flow-through entities. Under Section 482, the IRS can allocate income and deductions among related taxpayers. The RRA provides that payments to a retiring or deceased partner which are in exchange for unrealized receivables and goodwill will be treated as made in exchange for partnership property.
ISSN:0032-6321