Tax Alchemy?
How many of you remember Section 138509 of the Ways and Means Committee’s markup last September of what would have been the Build Back Better Act? (A moment of silence, please.) Allow me to jog your memory. Its heading read as follows: “TEMPORARY RULE TO ALLOW CERTAIN S CORPORATIONS TO REORGANIZE AS PARTNERSHIPS WITHOUT TAX.”[i]
“Oh, that Section 138509. Of course.”
Yep. Under the proposal, any corporation that was an S corporation on May 13, 1996[ii] could have been reorganized as a partnership without triggering a tax liability,[iii] provided the corporation transferred substantially all of its assets and liabilities to a domestic partnership during the two-year period beginning on December 31, 2021.
Continue Reading S Corps with Real Property: Separating Shareholders & Partnership Envy