DESCRIPTION
This module examines the key tax considerations of S corporations, including eligibility requirements, potential election violations and relief, election characteristics, and reasons entities choose or avoid S corporation status. Participants will analyze how S corporations compensate shareholders, including evaluating reasonable compensation requirements. The course also addresses tax treatment of fringe benefits for more-than-2% shareholders and reviews common compliance risks and potential S corporation violations. These concepts are explored and reinforced through group research, applied computations, and scenario-based analysis.
LEARNING OBJECTIVES
- Identify reasons why entities choose S corporation status.
- Explain how S corporations distribute income and compensate owners.
- Determine eligibility requirements for S corporation status.
- Identify key characteristics of S corporations, including election requirements.
- Evaluate reasonable compensation requirements for S corporation shareholders.
- Identify tax treatment of fringe benefits for shareholders owning more than 2%.
- Explain the purpose of Schedule M-2 and its role in retained earnings reconciliation.
