Dear Client,
Although much of the House Ways and Means Committee's tax proposals appear to significantly undercut the planning tools available to tax advisors and estate planners, we would like to highlight a provision considered to be a welcome bright spot! A funding proposal for The Build Back Better Act, introduced on September 13, 2021, includes a provision giving certain old and cold S corporations the opportunity to convert to partnerships. Eligible corporations must have been an S corporation back on May 13, 1996 (the year ‘check the box’ regulations were issued by the IRS) and the conversion must be a Qualified Liquidation to be considered a non-taxable event. With a Qualified Liquidation, there must be a complete liquidation of the S corporation coupled with a transfer of substantially all assets and liabilities to a domestic partnership within a two-year period starting December 31, 2021 (Section 332(b)).
Please keep in mind this is only a proposal from the House Ways and Means Committee which could become law if incorporated into the final legislation and passed by Congress and signed by the President.
If you have any questions regarding this proposal or any other corporate matter, please contact Todd or me at 404-255-7400 or info@hoffmanestatelaw.com.
Sincerely,
Joe