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S corp Built In Gains Tax

November 08, 2016 • John Roskos • Log In to Post Comments


At the 2016 Summer Tax Seminar it was said that for tax year 2016,the recognition period is 7 years for S corporations that made S elections in 2009 and 2010. I don't understand this statement. When you read IRC 1374 it seems to say the recognition period is now 5 years. So for example if an S corporation had realized built in gain in tax year 2016 but had been an S corporation for 60 months or more at the time the built in gain was realized, then the built in gains tax would not apply since the S corporation was past the recognition period. Spidell seems to be saying the recognition period is not 5 years, in all cases, for tax years 2016 and beyond. 




I don't see anything in the manual about that except that the 10 years was shortened to 7 years in 2009 and 2010. There may have been a misunderstanding. You use the year the disposition occurred to determine the gain so for 2016, the lookback will be 5 years for federal and 10 years for CA.

Yes it is not in the printed materials but was part of the oral presentation and I took notes. Please confirm with Tim. Thank you for your time.

I checked with Steve who made the presentation and he didn't remember saying this. Both he and Tim agree that for a 2016 sale, the BIG lookback is 5 years.


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