Chapter 24: Planning for S Corporations and Partnerships

This chapter applies entity-tax rules to practical planning choices for S corporations and partnerships. The central skill is recognizing which elections, timing decisions, and financing structures improve tax results without losing sight of basis and character consequences.

In This Chapter

• Built-In Gains and Planning for Asset Dispositions explains how prior history affects current planning options.
• Timing of Income and Elections to Optimize Tax Benefits covers deferral, acceleration, and election-based planning decisions.
• Shifting Income and Maximizing Basis Recovery examines ways to improve owner-level tax results within the rules.
• Partner and Shareholder Loans; Strategic Structuring explains how financing choices affect basis and risk.

How to Use This Chapter

• Read this chapter after the core S corporation and partnership chapters, not before them.
• Focus on what planning move changes the tax result and what compliance or basis cost comes with it.
• Revisit it when an exam scenario asks for the best next step rather than the mechanical rule alone.

In this section

• Built-In Gains and Planning for Asset Dispositions
  Discover key strategies to reduce or defer built-in gains tax for S corporations transitioning from C status, including recognition period rules, valuation considerations, and advanced tax planning techniques.
• Timing of Income and Elections to Optimize Tax Benefits
  Explore strategic timing of income, short tax year elections, and accounting method opportunities for S Corporations and Partnerships, enhanced by forecasting scenarios to optimize tax benefits.
• Shifting Income and Maximizing Basis Recovery
  Discover effective strategies to allocate partnership or S corporation income through guaranteed payments, special allocations, and thoughtful ownership changes, while ensuring optimal basis recovery for tax benefits.
• Partner and Shareholder Loans; Strategic Structuring
  Discover how partner and shareholder loans can enhance basis planning, overcome at-risk limitations, and optimize tax positions in S corporations and partnerships.