Bill > S1905

This bill aims to make permanent a reduced timeframe for taxing certain profits of S corporations, which are businesses that pass their profits and losses through to their owners for tax purposes, avoiding corporate income tax. Specifically, it proposes to permanently set the "recognition period" for "built-in gains" at five years, down from the current ten years. Built-in gains refer to the profit on assets that an S corporation owned before it qualified as an S corporation. This means that if an S corporation sells an asset that has increased in value since before it became an S corporation, the profit from that sale will be taxed at the corporate level only if it occurs within five years of the company becoming an S corporation, rather than ten years. This change is intended to apply to tax years beginning after December 31, 2014.