The S Corp Tax Trap: Potential Estate Tax Trap for Family-Owned Businesses
Family-owned businesses are commonly held as S corporations, and estate planners should be wary of a potential tax trap that could lead to unintended and adverse income tax consequences in certain circumstances. The main driver is the disparity between “inside” and “outside” tax basis in the S corporation stock in the hands of a surviving spouse (or trust for the benefit of surviving spouse) when the underlying operating assets of the S corporation are monetized to cash and distributed. This article provides a brief overview of the estate and income tax rules, and takes the reader through an illustration of the potential pitfalls and how to avoid them...
WTAS Managing Directors, James Goode and Robert Prifti, reside in the Boston Office.
Massachusetts Family Business Magazine
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