§ 1371. Coordination with subchapter C
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(a)Application of subchapter C rules Except as otherwise provided in this title, and except to the extent inconsistent with this subchapter, subchapter C shall apply to an S corporation and its shareholders.
(b)No carryover between C year and S year
(1)From C year to S year No carryforward, and no carryback, arising for a taxable year for which a corporation is a C corporation may be carried to a taxable year for which such corporation is an S corporation.
(2)No carryover from S year No carryforward, and no carryback, shall arise at the corporate level for a taxable year for which a corporation is an S corporation.
(3)Treatment of S year as elapsed year Nothing in paragraphs
(1)and
(2)shall prevent treating a taxable year for which a corporation is an S corporation as a taxable year for purposes of determining the number of taxable years to which an item may be carried back or carried forward.
(c)Earnings and profits
(1)In general Except as provided in paragraphs
(2)and
(3)and subsection (d)(3), no adjustment shall be made to the earnings and profits of an S corporation.
(2)Adjustments for redemptions, liquidations, reorganizations, divisives, etc. In the case of any transaction involving the application of subchapter C to any S corporation, proper adjustment to any accumulated earnings and profits of the corporation shall be made.
(3)Adjustments in case of distributions treated as dividends under section 1368(c)(2) Paragraph
(1)shall not apply with respect to that portion of a distribution which is treated as a dividend under section 1368(c)(2).
(d)Coordination with investment credit recapture
(1)No recapture by reason of election Any election under section 1362 shall be treated as a mere change in the form of conducting a trade or business for purposes of the second sentence of section 50(a)(6).
(2)Corporation continues to be liable Notwithstanding an election under section 1362, an S corporation shall continue to be liable for any increase in tax under section 49(b) or 50(a) attributable to credits allowed for taxable years for which such corporation was not an S corporation.
(3)Adjustment to earnings and profits for amount of recapture Paragraph
(1)of subsection
(c)shall not apply to any increase in tax under section 49(b) or 50(a) for which the S corporation is liable.
(e)Cash distributions during post-termination transition period
(1)In general Any distribution of money by a corporation with respect to its stock during a post-termination transition period shall be applied against and reduce the adjusted basis of the stock, to the extent that the amount of the distribution does not exceed the accumulated adjustments account (within the meaning of section 1368(e)).
(2)Election to distribute earnings first An S corporation may elect to have paragraph
(1)not apply to all distributions made during a post-termination transition period described in section 1377(b)(1)(A). Such election shall not be effective unless all shareholders of the S corporation to whom distributions are made by the S corporation during such post-termination transition period consent to such election.
(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.
(Added Pub. L. 97–354, § 2, Oct. 19, 1982, 96 Stat. 1681; amended Pub. L. 98–369, div. A, title VII, § 721(e), (o), (x)(3), July 18, 1984, 98 Stat. 967, 970, 971; Pub. L. 99–514, title XVIII, § 1899A(33), (34), Oct. 22, 1986, 100 Stat. 2960; Pub. L. 101–508, title XI, § 11813(b)(23), Nov. 5, 1990, 104 Stat. 1388–555; Pub. L. 104–188, title I, § 1310, Aug. 20, 1996, 110 Stat. 1784; Pub. L. 115–97, title I, § 13543(b), Dec. 22, 2017, 131 Stat. 2155; Pub. L. 117–167, div. A, § 107(b)(3)(C), Aug. 9, 2022, 136 Stat. 1398; Pub. L. 119–21, title VII, § 70513(b)(3)(B)(i), July 4, 2025, 139 Stat. 272.)
Connections40 cite this · traces to 11
Cited by 40 sections · top 18
U.S. Code
statutes-at-large
- Public Law 87–834
- Public Law 91–469
- Public Law 91–169to promote the safety of employees and travelers upon railroads by limiting the hours of service of employees thereon,” approved March 4, 1907
- Public Law 88–272
- Public Law 97–448To make technical corrections in the Economic Recovery Tax Act of 1981 and certain other recent tax legislation
- Public Law 98–369To provide for tax reform, and for deficit reduction
- Public Law 96–223To impose a windfall profit tax on domestic crude oil, and for other purposes
- Public Law 97–34To amend the Internal Revenue Code of 1954 to encourage economic growth through reduction of the tax rates for individual taxpayers, acceleration of capital cost recovery of investment in plant, equipment, and real property, and incentives for savings, and for other purposes
- Public Law 94–568To amend the Internal Revenue Code of 1954 with respect to the tax treatment of social clubs and certain other membership organizations, to provide for a study of tax incentives for recycling, and for other purposes
- Public Law 95–600To amend the Internal Revenue Code of 1954 to reduce income taxes, and for other purposes
- Public Law 97–354To revise subchapter S of the Internal Revenue Code of 1954 (relating to small business corporations)
- Public Law 94–452To amend the Internal Revenue Code of 1654 with respect to the tax treatment of certain divestitures of assets by bank holding companies
- Public Law 97–248To provide for tax equity and fiscal responsibility, and for other purposes
- Public Law 96–589To amend the Internal Revenue Code of 1954 to provide for the tax treatment of bankruptcy, insolvency, and similar proceedings, and for other purposes
- Public Law 94–455To reform the tax laws of the United States
Traces to 11 documents
public-private-law
- To provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018.DecPublic Law 115-97
- Making appropriations for Legislative Branch for the fiscal year ending September 30, 2022, and for other purposes.AugPublic Law 117-167
- To provide for reconciliation pursuant to title II of HPublic Law 119-21
49 references not yet in our index
- Pub. L. 97–354, § 2
- 96 Stat. 1681
- Pub. L. 98–369, div. A, title VII, § 721(e)
- 98 Stat. 967
- Pub. L. 99–514, title XVIII, § 1899A(33)
- 100 Stat. 2960
- Pub. L. 101–508, title XI, § 11813(b)(23)
- 104 Stat. 1388–555
- Pub. L. 104–188, title I, § 1310
- 110 Stat. 1784
- 131 Stat. 2155
- 136 Stat. 1398
- 139 Stat. 272
- Pub. L. 85–866, title I, § 64(a)
- 72 Stat. 1650
- Pub. L. 86–376, § 2(a)
- 73 Stat. 699
- Pub. L. 88–272, title II, § 233(a)
- 78 Stat. 112
- Pub. L. 94–455, title IX, § 902(a)(1)
- 90 Stat. 1608
- Pub. L. 95–600, title III
- 92 Stat. 2843
- Pub. L. 96–589, § 5(d)
- 94 Stat. 3406
- Pub. L. 97–34, title II
- 95 Stat. 250
- Pub. L. 97–448, title I, § 102(i)(1)
- 96 Stat. 2372
- section 2 of Pub. L. 97–354
- Pub. L. 104–188
- Pub. L. 101–508, § 11813(b)(23)(A)
- Pub. L. 101–508, § 11813(b)(23)(B)
- Pub. L. 99–514, § 1899A(33)
- Pub. L. 99–514, § 1899A(34)
- Pub. L. 98–369, § 621(e)(2)
- Pub. L. 98–369, § 721(e)(1)
- Pub. L. 98–369, § 721
- Pub. L. 98–369, § 721(x)(3)
- section 1317(a) of Pub. L. 104–188
+ 9 more
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§ 1371
Coordination with subchapter C
Stat.×36
U.S.C.×4
Pub. L.Pub. L. 97–354, § 2
Stat.96 Stat. 1681
Pub. L.Pub. L. 98–369, div. A, title VII, § 721(e)
Cites 60 · showing 12Cited by 40 across 2 sources