Bill > HR629

This bill, the Permanent S Corporation Built-in Gain Recognition Period Act of 2015, amends the Internal Revenue Code to permanently reduce the recognition period for built-in gains of an S corporation, or "S corporation," from 10 years to 5 years. An S corporation is a type of business that passes corporate income, losses, deductions, and credits through to its shareholders for federal tax purposes, avoiding double taxation. "Built-in gains" refer to the excess of a corporation's fair market value over its adjusted basis in an asset at the time it elected to become an S corporation. Previously, these gains were subject to a corporate-level tax if sold within 10 years of the S corporation election. This bill makes the shorter 5-year period permanent, meaning that if an S corporation sells an asset that had a built-in gain when it became an S corporation, the tax on that gain will only apply if the sale occurs within 5 years of the election, and this rule will now be in effect indefinitely for taxable years beginning after December 31, 2014.