Entity Structuring and Tax Planning for Tech Companies: S Corp vs. C Corp, Transaction Structures, Pitfalls to Avoid

Entrepreneurs start hundreds of tech businesses annually, encountering similar entity structuring and tax challenges. Tax professionals must be able to identify potential tax issues and navigate complex federal and state tax regulations faced by tech companies.

In determining the appropriate entity structure, owners and their counsel must consider equity ownership, compensation, current intellectual property and other assets, and tax reporting and tax planning to minimize tax liability of certain transactions.

S corporations provide significant advantages to shareholders through pass-through taxation, whereas C corporations may be more advantageous under certain circumstances. However, tax professionals often fail to recognize crucial distinctions from other entities and critical issues under current tax law and other recent developments.

Listen as our panel discusses U.S. tax issues that arise in S corporations vs. C corporations, transaction structures, and other key items that must be considered for companies within the tech industry.

I. Key factors to consider in entity structuring

II. Tax challenges for C corps

III. Tax challenges for S corps

IV. Challenges related to equity and incentive grants, options, etc.

V. Best practices and transaction planning considerations

The panel will review these and other key issues:

• What are the critical tax challenges of S corps and C corps under current tax law?
• What issues arise for cash distributions, class of stock, deferred compensation, and transfers of interest?
• What are the factors to consider in determining whether to retain or elect S corp status or convert to C corp?
• Under what circumstances is a C corp entity choice preferred over an S corp?

Learning Objectives

After completing this course, you will be able to:

• Understand the tax reporting requirements for S corp vs. C corp entity structures
• Decide criteria for S corporation shareholders
• Recognize tax efficiencies and limitations of an S corporation conversion
• Identify key provisions that should be in organizational documents for S and C corporations
• Ascertain steps to take when a corporation fails to elect Subchapter S status

• 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, supervising other preparers/accountants, preparing complex corporate tax forms and schedules. Specific knowledge of rules governing corporate entity structuring, and federal income tax treatment of business entities. Familiarity with Subpart F rules and concepts of cross-border tax arbitrage and hybrid entities.

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).