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S corporations
REG Chapter 20 · Area V · Blueprint V.C
An S corporation is a corporation under state law but, for federal income tax, mostly a conduit: its income, deductions and credits pass through to its shareholders, who pay the tax. This chapter covers who may own an S corporation and how it elects, what ends the election, how ordinary business income is separated from items stated separately on Schedule K, how a shareholder's stock and debt basis move, how distributions are taxed through the accumulated adjustments account, and the few taxes the corporation itself still pays. The Blueprint adds two analysis tasks: reviewing Form 1120-S for correct classification and resolving software diagnostics. Ivan's company, Delgado Tile Inc., is the case. Figures are for tax year 2026.
In this chapter
- Who can be an S corporation
- Making the S election
- Revocation and termination
- Ordinary business income and separately stated items
- Allocating items to shareholders
- Shareholder stock basis
- Debt basis and loan repayments
- Distributions and the accumulated adjustments account
- Corporate-level taxes and reviewing Form 1120-S
This chapter has 9 lessons, 50 practice MCQs with explanations and 20 simulations, plus flashcards and a recall sheet.
What this chapter covers
- Eligibility and election
- termination
- ordinary income and separately stated items
- AAA
- stock and debt basis