Liquidating qsss qsub

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The proposed regulations will, when made final, supplant the temporary QSSS election procedure set forth in IRS Notice 97-4.The regulations also address many other issues, and reach some conclusions that may surprise many tax practitioners.In general, the liquidation that results from a QSSS election is deemed to occur as of the close of the day before the effective date of the QSSS election.Special timing rules apply if a QSSS election is made effective on the date an S corporation first acquires 100% of the stock of another corporation (in which case the liquidation is deemed to occur immediately after the acquisition of 100% ownership), or in connection with a qualified stock purchase by an S corporation with respect to which a section 338 election is made.

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The Code provisions that address the QSSS election leave open numerous questions relating to how the QSSS election is to be made or revoked, and regarding the tax consequences of a corporation becoming or ceasing to be a QSSS.The election will take effect on any effective date specified on the form that is not more than two months and fifteen days prior to, or twelve months after, the date of filing.If no effective date is specified on the form, the election is effective when the form is filed.Highlights of the proposed regulations are reviewed below.Background Under Subchapter S as amended by the Small Business Job Protection Act of 1996, an S corporation may own 80 percent or more of the stock of a C corporation, and may elect to treat as a QSSS a wholly owned subsidiary (other than certain financial institutions and other ineligible corporations).

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