DESCRIPTION
This module provides an in-depth overview of the S corporation built-in gains (BIG) tax, including its underlying policy rationale and when it is triggered. Participants learn how to compute BIG by applying statutory limitations and separately accounting for S corporation BIG carryforwards and C corporation carryforwards from the final C corporation year. The module also explores how BIG rules apply in practical scenarios through computational examples and detailed case studies. Additional discussion highlights how installment sales, like-kind exchanges, and cash-basis accounts receivable and payable can affect BIG exposure, along with planning considerations to mitigate potential tax consequences.
LEARNING OBJECTIVES
- Explain the theory behind the built-in gains (BIG) tax.
- Identify transactions and events that trigger the S corporation BIG tax.
- Calculate S corporation BIG, including the application of the BIG limitations, S corporation BIG carryforwards, and carryovers from final year of a C Corporation.
- Review how installment sales, like-kind exchanges, and cash-basis accounts receivable and accounts payable can affect S corporation BIG.
- Develop strategies to mitigate or avoid S corporation BIG exposure.
