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with the Sec. 267(c)(4) constructive
ownership rules, the IRS concluded Contributors
in the notice that a majority owner of
a corporation does not have qualified Andrew M. Brajcich, CPA, J.D., LL.M., is the Jud Regis endowed chair of account-
wages that are ERC-eligible when the ing, associate professor of accounting, and graduate accounting director at Gon-
majority owner has a spouse, brother or zaga University in Spokane, Wash. Kristin Hill, CPA, is the owner of Kristin Hill, CPA,
sister (whether by whole or half-blood), P.C. in Berkeley, Calif. Robert W. Jamison Jr., CPA, Ph.D., is author of CCH’s S
ancestor, or lineal descendant. The rea- Corporation Taxation and professor emeritus of accounting at Indiana University in
son is because, under Sec. 267(c), each Indianapolis. Robert S. Keller, CPA, J.D., LL.M., is a partner in KPMG’s Washington
of those family members is considered National Tax practice. Kirk T. Mitchell, CPA, MST, is a tax senior manager at Schnei-
to own more than 50% of the stock of der Downs & Co. Inc. in Pittsburgh. Kenneth N. Orbach, CPA, Ph.D., is a professor
the corporation. of accounting at Florida Atlantic University in Boca Raton, Fla. Alexander Scott, J.D.,
Likewise, the IRS concluded that a LL.M., is a senior manager with AICPA Tax Policy & Advocacy in Washington, D.C.
spouse of a majority owner is a related Kevin J. Walsh, CPA, CGMA, is a partner in Walsh, Kelliher & Sharp, CPAs, APC, in
individual for purposes of the ERC, Fairbanks, Alaska. Each of the authors (except for one) is a member of the AICPA S
whose wages are not qualified wages Corporation Taxation Technical Resource Panel. Other members of the panel also
when the majority owner has a fam- contributed to this material. Mr. Scott serves as the AICPA staff liaison for the panel.
ily member who is a brother or sister For more information about this article, contact thetaxadviser@aicpa.org.
(whether by whole or half-blood), ances-
tor, or lineal descendant (and the spouse
bears a relationship described in Secs.
152(d)(2)(A)–(H)). The notice provides
an example in the flush language of the AICPA RESOURCES
explanatory paragraph concluding:
Articles
A direct majority owner’s brother Warley, et al., “Tax Issues That Arise When a Shareholder or Partner
would be a constructive majority Dies,” 53 The Tax Adviser 20 (March 2022)
owner under section 267(c)(2) and Alberty, “S Corporation Shareholder Recomputation of Basis,” 53 The Tax
(4) and the spouse of the direct ma- Adviser 27 (February 2022)
jority owner would be considered a Samtoy, “Complying With New Schedules K-2 and K-3,” Tax Insider (Feb.
related individual to the constructive 11, 2022)
majority owner by virtue of the in-
law relationship described in section
CPE self-study
152(d)(2)(G).
S Corporations: Key Issues, Compliance, and Tax Strategies — Tax Staff
Essentials
In summary, owners can be deemed
Reviewing S-Corp Returns
to own more than 50% of an S corpora-
Tax Staff Essentials — S Corporation Bundle
tion through the interplay of Sec. 51,
Sec. 152, and the constructive ownership
rules of Sec. 267(c) (via family members, Tax Section resources (for members)
trusts, and other business relationships), S Corporation Shareholder Basis Schedule
and their compensation earned is ineli-
IRS Schedules K-2 and K-3 guidance and resources
gible to be included in the ERC calcula-
2021 S Corporation Income Tax Return Checklist — Form 1120-S (Long)
tion. Accordingly, tax advisers must fully
2021 S Corporation Income Tax Return Checklist — Form 1120-S (Short)
understand the client’s often complex
ownership structures in determining 2021 S Corporation Income Tax Return Checklist — Form 1120-S (Mini)
whether owners’ wages are eligible to be
used in the ERC calculation. ■ For more information or to make a purchase, visit aicpa.org/cpe-learning or
call the Institute at 888-777-7077.

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