The Tax Reform Act of 1986 (the “TRA 86”) was signed into law by President Ronald Reagan on October 22, 1986, exactly 38 years ago today. TRA 86 was sponsored by, among others, Representative Richard Gephardt (D-Missouri) in the U.S. House of Representatives and Senator Bill Bradley (D-New Jersey) in the U.S. Senate. It was strongly supported by the Chairman of the House Ways and Means Committee, Dan Rostenkowski (D-Illinois) and the Chairman of the Senate Finance Committee, Bob Packwood (R-Oregon).
TRA 86 is one of the most comprehensive pieces of tax reform legislation ever enacted in the United States. It was the result of a collaborative effort by Democrats and Republicans that spanned three years.
In this Part XII of my multi-part series on some of the not-so-obvious aspects of S corporations, I explore a consistent theme – taxpayers lose fights with taxing authorities when they fail to maintain adequate records. Keeping adequate records is vitally important to S corporations and their shareholders or, for that matter, all taxpayers.
Background
Time and time again, taxpayers lose their battles with the IRS and other taxing authorities for the same reason – failure to maintain adequate records. One of the greatest services that tax advisers can provide their clients is preaching the virtues of maintaining good records.
I am excited to share that the 83rd Institute on Federal Taxation (IFT) will be held in New York City on October 20-25, 2024, and in San Diego, California on November 17-22, 2024.
This year, I will present my latest white paper, “A Magical Mystery Tour Through Subchapter S – A Look At Some Of The Twists and Turns.” During our session, we will take a deep dive into some of the interesting, yet deceptive and/or obscure, provisions of Subchapter S that could catch the unwary off guard. Our tour will take us on a journey through some of the treacherous terrain containing the built-in gains tax, shareholder eligibility, the impact of excessive passive income on S corporations with C E&P and the impact of a fraudulent S corporation return on the shareholders, and we will end our journey frolicking through the beauty created by some interesting cases and rulings.
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Larry J. Brant
Editor
Larry J. Brant is a Shareholder and the Chair of the Tax & Benefits practice group at Foster Garvey, a law firm based out of the Pacific Northwest, with offices in Seattle, Washington; Portland, Oregon; Washington, D.C.; New York, New York, Spokane, Washington; Tulsa, Oklahoma; and Beijing, China. Mr. Brant is licensed to practice in Oregon and Washington. His practice focuses on tax, tax controversy and transactions. Mr. Brant is a past Chair of the Oregon State Bar Taxation Section. He was the long-term Chair of the Oregon Tax Institute, and is currently a member of the Board of Directors of the Portland Tax Forum. Mr. Brant has served as an adjunct professor, teaching corporate taxation, at Northwestern School of Law, Lewis and Clark College. He is an Expert Contributor to Thomson Reuters Checkpoint Catalyst. Mr. Brant is a Fellow in the American College of Tax Counsel. He publishes articles on numerous income tax issues, including Taxation of S Corporations, Reasonable Compensation, Circular 230, Worker Classification, IRC § 1031 Exchanges, Choice of Entity, Entity Tax Classification, and State and Local Taxation. Mr. Brant is a frequent lecturer at local, regional and national tax and business conferences for CPAs and attorneys. He was the 2015 Recipient of the Oregon State Bar Tax Section Award of Merit.
