S corporation conversions – Should you strike while the iron’s hot?

Description

Abstract: Subchapter S election can potentially provide shareholders with more flexibility in business decisions, income and capital gains tax considerations, and distribution alternatives. But there are several valuation issues and implications worth considering before taking a leap toward Subchapter S status. This article looks at the pros and cons of S corporation status and the issue of tax affecting earnings, noting that it’s important to consider the facts of the particular case as well as relevant case law.