Practitioners Urge Clarification on S Corp Distributions

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Rules on S corporation distributions associated with taxable income should be clarified to help streamline administrative processes, Christopher Hesse, CPA and partner at Clifton Larson Allen, tells BNA. Hesse's remarks follow a comment letter to IRS from the American Institute of Certified Public Accountants, where Hesse is incoming chairman of the S Corporation Technical Resource Panel. AICPA's letter recommends that Private Letter Rulings 201017019 and 200308035 involving S corporations be incorporated into the language of the regulation. Michael Grace, formerly with IRS Passthroughs and Special Industries, agrees that the holdings from the PLRs would be “pro-taxpayer.” But he does not agree that incorporating them as amendments to the regulations would be the best mechanism for clarifying the issue for taxpayers.