2022 Standard Federal Tax Reporter (CCH) Committee Reports on P.L. 98-369 (Deficit Reduction Act of 1984), Congress (United States)

Summary

• Committee Report: Standard Federal Tax Reporter (2022), Committee Reports on P.L. 98-369 (Deficit Reduction Act of 1984)

  .80 Explanation of Provision. -The bill provides that a corporation can elect to have the new passive income rules apply only for taxable years beginning after December 31, 1982, the general effective date for the Act. Thus, a corporation with excess passive income under the rules of prior law for its taxable year beginning in 1982 can elect to terminate its subchapter S election rather than paying both a corporate and shareholder tax on that income. If an election under this provision is made causing the termination of the subchapter S election, the corporation cannot re-elect subchapter S status within 5 years without the consent of the Internal Revenue Service.- House Committee Report. 

  Present law imposes a tax on subchapter S corporations with passive income and subchapter C earnings and profits. Under the conference agreement, this tax could be waived by the ...