Consider the factors that determine whether a QSUB election should be made. Discuss topics covering both immediate and long-term tax consequences and the process necessary to make the election. If an S corporation owns 100% of the stock of another corporation, the tax consequences of the operation of the subsidiary will depend on whether the S corporation makes a 'qualified subchapter S subsidiary election' (QSUB election). We'll examine the tax compliance requirements necessary to successfully make the QSUB election.
Learning Objectives
- Recognize the immediate and long-term tax consequences of making or not making a QSUB election.
- Identify situations where the QSUB election can be made.
- Analyze the result of the "deemed liquidation" including unusual facts which can create complications.
- Discuss situations where the election could be desirable or undesirable.
- Explain the tax compliance requirements necessary to successfully make the QSUB election.
- Understand tax consequences of termination of QSUB election
Major Topics
- Requirements that must be satisfied to make the QSUB election.
- How to make the QSUB election.
- Immediate tax consequences of the election, "deemed liquidation."
- Potential complications of "deemed IRC 332 liquidation."
- Situations where the QSUBelection could be desirable.
- Situations where the QSUB election could be undesirable.
- Longer-term consequences of the decision to elect or not elect.
- Terminations of QSUB election
