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Course Details

Course Information
  • smart_display Format

    On-Demand

  • signal_cellular_alt Difficulty Level

    Intermediate

  • work Practice Area

    Tax Law

Date & Time
  • event Date

    Thursday, May 11, 2023

  • schedule Time

    1:00 p.m. ET./10:00 a.m. PT

  • timer Program Length

    90 minutes

Credit Information

  • This 90-minute webinar is eligible in most states for 1.5 CLE credits.

  • BARBRI is a NASBA CPE sponsor and this 110-minute webinar is accredited for 2.0 CPE credits.

  • BARBRI is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).

$347.00
CLE
CPE
ALL

This CLE/CPE course will provide tax counsel and advisers with a specific and practical guide to navigating the tax rules that apply to the redemption of S corporation interests. The panel will discuss characterization as a sale or exchange versus distribution, tax consequences associated with such transactions under the new tax law, application of Sections 302 and 301, and available planning techniques to structure transactions and avoid unintended tax liability.

Faculty

Michael Kosnitzky
Partner
Pillsbury Winthrop Shaw Pittman LLP

Mr. Kosnitzky, co-leader of Pillsbury Winthrop Shaw Pittman’s  Private Wealth practice, advises some of the world’s most well-respected individuals, families and privately held businesses, using a holistic risk-assessment approach to the law. He was recently named as a Lawdragon 500 Leading Lawyer for 2020 which honors him as one of the top 500 attorneys in the United States irrespective of practice area.  Mr. Kosnitzky has also been recognized in various other publications including Chambers, Legal 500, Best Lawyers, Super Lawyers  and  as a Trust and Estates Trailblazer by the National Law Journal for his focus on where IRS policy is going and not necessarily where it stands today. His tax-minimizing strategies guide financial and strategic buyers in complex taxable and tax-free mergers and acquisitions; privately held businesses in estate tax-efficient succession planning; private investment funds in their choice of jurisdictions and structures; wealthy families in generational real estate income tax and estate tax planning; individuals and family offices regarding artwork and collectables; and ultra-high-net-worth individuals in U.S. and foreign trust matters. Mr. Kosnitzky, who is also a certified public accountant, is a prolific writer on diverse tax topics and the co-author of two treatises on S corporations. The S Corporation: Planning and Operation and The S Corporation Answer Book, both Wolters Kluwer publications.

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Keith J. Blum
Partner
Berger Singerman

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Description

Transfer of ownership of an S corporation can be accomplished via redemption of the shareholder's interest by the S corporation rather than a sale of the shares to a third party. Redemptions can result in significantly different tax treatment than a sale, and tax counsel and advisers must grasp an understanding of the applicable tax rules in structuring these transactions.

The enactment of new tax law has caused shareholders of S corporations to consider a variety of transactions impacting their ownership interests to take advantage of any potential tax savings, including contemplating a subsequent conversion to a C corporation. S corporations engaging in shareholder redemptions can optimize tax treatment if such transactions are structured correctly.

A redemption qualifying as a sale or exchange rather than characterized and taxed as a dividend is one of the key concerns when structuring these transactions. Also, tax counsel and advisers must be aware of the potential pitfalls of such deals under Sections 302 and 301 and contemplate the impact of specific provisions stemming from tax reform.

Listen as our experienced panel discusses the potential tax pitfalls of S corporation redemptions and sale or exchange versus distributions under Sections 302 and 301, as well as offers best practices and tax planning techniques in structuring transactions.

Outline

  1. S corporation redemptions and the impact of tax reform
  2. Stock redemptions under Section 302: application, tax consequences, exceptions
  3. Section 301 and tax consequences of failing to qualify under Section 302
  4. Best practices and tax planning techniques in structuring a redemption
  5. Converting to a C corporation: key considerations, potential tax traps

Benefits

The panel will review these and other key issues:

  • Structuring S corporation redemptions post-tax reform
  • Under what circumstances would redemption be disadvantageous to the S corporation or shareholders?
  • Application of Section 302 and meeting the requirements of a sale or exchange and exceptions
  • The application of constructive ownership under Sec. 318 about Sec. 302
  • Tax consequences of distribution under Section 301
  • Best practices and planning opportunities in structuring redemptions

NASBA Details

Learning Objectives

After completing this course, you will be able to:

  • Identify issues in structuring S corporation redemptions post-tax reform
  • Recognize circumstances where redemption can be disadvantageous to the S corporation or shareholders
  • Understand the characterization standards and requirements of Section 302 and exceptions thereof
  • Recognize the tax consequences of a sale or exchange under Section 302 versus a distribution under Section 301
  • Ascertain tax planning techniques in structuring S corporation redemptions

  • Field of Study: Taxes
  • Level of Knowledge: Intermediate
  • Advance Preparation: None
  • Teaching Method: Seminar/Lecture
  • Delivery Method: Group-Internet (via computer)
  • Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
  • Prerequisite: Three years+ business or public firm experience at mid-level within the organization, preparing complex income tax forms and schedules for partnerships and pass throughs; supervisory authority over other preparers/accountants. Knowledge and understanding of pass-through structures, dissolution and related taxation; Familiarity with sale and redemption of a departing shareholder/partner interest, characterizing gain and loss determined upon a transfer.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).