May 2005

New Business

New rules could make an S corporation good for your business

5/1/2005 -

The S corporation is alive and well, and this form of business operation remains appropriate for many business owners. With the changes made by the recent passage of the American Jobs Creation Act of 2004, even more business owners might consider this form of corporation. Here are the recent changes:

* An increase, from 75 to 100, in the number of shareholders allowed.

* The allowance of family members (within six generations of one another) to be counted as only one shareholder.

* The allowance for prior suspended losses to be transferred along with the corporation shares to a former spouse in divorce.

* The allowance of IRA accounts (including Roth IRAs) to own S corporation bank stock under certain circumstances.

The S corporation as a business entity should not be overlooked, but the decision to elect S status can be complicated. We are available to answer your questions and help you select the legal form that is best for you and your business.

Before you invest in any business, it's always a good idea to discuss the proposed venture with your advisors. If you would like assistance with evaluating a business opportunity or with legitimate tax planning, please call our office.