Not Knowing the S Corp Rules Can Be Dangerous to Your Client’s WealthNot Knowing the S Corp Rules Can Be Dangerous to Your Client’s Wealth

Superman is the most powerful S corporation (S corp) in the world. He’s so proud of his S status, he wears it on his chest. 

Until now, most people thought that only kryptonite could take away Superman’s powers. Read on, and you’ll learn the many ways he can lose his S corp status, actions his advisors can take to prevent its loss and sometimes get it back after it’s lost.

Why an S corp? It has only one level of taxation, the shareholders. By comparison, C corporations (C corps) have a corporate level tax, and distributed earnings are taxed again to the shareholders. 

Overview

An S corp elects to pass through corporate income, losses, deductions and credits to shareholders for federal income tax purposes. (We’ll talk about state tax laws lat...