Page 416 - Small Business IRS Training Guides

Provision 13543

Amendment of Section 481

Section 13543 amended section 481 by adding the following new subsection:

(d) ADJUSTMENTS ATTRIBUTABLE TO CONVERSION FROM S CORPORATION TO C CORPORATION.

(1) IN GENERAL. In the case of an eligible terminated S corporation, any adjustment required by subsection

(a)(2) which is attributable to such corporation’s revocation described in paragraph (2)(A)(ii) shall be
taken into account ratably during the 6-taxable year period beginning with the year of change.

(2) ELIGIBLE TERMINATED S CORPORATION. For purposes of this subsection, the term ‘eligible
terminated S corporation’ means any C corporation—

(A) which—

(i) was an S corporation on the day before the date of the enactment of the Tax Cuts and
Jobs Act, and

(ii) during the 2-year period beginning on the date of such enactment makes a revocation of
its election under section 1362(a), and

(B) the owners of the stock of which, determined on the date such revocation is made, are the same

owners (and in identical proportions) as on the date of such enactment.

Amendment of Section 1371

Section 1371 is amended by adding at the end the following new subsection:

(f) CASH DISTRIBUTIONS FOLLOWING POST-TERMINATION TRANSITION PERIOD.—In the case of a
distribution of money by an eligible terminated S corporation (as defined in section 481(d)) after the post-
termination transition period, the accumulated adjustments account shall be allocated to such distribution, and

the distribution shall be chargeable to accumulated earnings and profits, in the same ratio as the amount of

such accumulated adjustments account bears to the amount of such accumulated earnings and profits.”

73233-102 13543-3 Tax Cuts and Jobs Act