John G. Hodnette
What is a QSub?
As discussed in my February 2025 blog post Eligible S Corporation Shareholders, corporations generally cannot own the stock of S corporations, even if the…
Expanded Benefits for Qualified Small Business Stock Under the OBBB
The gain exclusion benefits for the sale of qualified small business stock (“QSBS”) have grown in popularity in recent years, in part due to the 2017 Tax…
Classification of LLCs Under the Check-the-Box Regulations
Limited Liability Companies (or LLCs) were invented in Wyoming in 1977. They have since spread to all states and become one of the most popular entities to…
Disallowance of Deductions or Credits Under Section 269
Section 269(a) applies where a “person or persons acquire, directly or indirectly, control of a corporation” and “the principal purpose for which such…
Carried Interest Holding Period Under Section 1061
Enacted in 2017, Section 1061 provides a minimum holding period of three years for long-term capital gains for carried interests issued to certain service…
Meaningless Gesture Doctrine Under Section 351
Section 351(a) provides no gain or loss is recognized if property is transferred to a corporation by one or more persons solely in exchange for stock in such…
Potential Gain Due to Assumption of Liabilities by Corporation
A taxpayer’s relief from indebtedness is generally a taxable event. However, where Section 351 applies to a contribution of assets to a corporation for…
Eligible S Corporation Shareholders
Section 1361(b)(1) provides a corporation can qualify for taxation as an S corporation only if none of its owners are nonresident aliens, foreign entities,…
Disallowance of Deduction of Fines and Penalties Versus Restitution
Subject to the origin of the claim test, most judgments or settlements paid by a business are fully deductible as ordinary and necessary business expenses…
Equitable Recoupment
The doctrine of equitable recoupment applies to both assessment by the IRS (in Section 6501) and refunds by taxpayers (in Section 6511) where the IRS or…