Bill > S2017

This bill introduces several significant modifications to S corporations' tax treatment, aimed at modernizing and simplifying corporate tax regulations. The bill includes five key provisions: First, it creates a new tax treatment for S corporation built-in gain amounts upon a shareholder's death, allowing shareholders to take deductions for amortizing the corporation's built-in gain over a 15-year period. Second, it modifies passive investment income rules by increasing the percentage limit from 25% to 60% and eliminating passive income as a termination event for S corporations. Third, the bill permits nonresident alien individuals to become S corporation shareholders and establishes a withholding tax mechanism for their effectively connected income. Fourth, it allows employees of a firm to be counted as a single shareholder toward the shareholder limit and expands eligible shareholders to include Individual Retirement Accounts (IRAs). Finally, the bill includes a provision allowing suspended losses to be transferred incident to a shareholder's death. These changes are designed to provide more flexibility for S corporations, remove certain restrictive ownership rules, and create more opportunities for business owners to structure their corporate entities efficiently.

Budget and Finance

https://www.congress.gov/bill/119th-congress/senate-bill/2017/all-info