H.R. 4056 (103rd): S Corporation Reform Act of 1993

Mar 16, 1994 (103rd Congress, 1993–1994)
Died (Referred to Committee)
Peter Hoagland
Representative for Nebraska's 2nd congressional district
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Last Updated
Mar 16, 1994
41 pages

This bill was introduced on March 16, 1994, in a previous session of Congress, but was not enacted.

Introduced Mar 16, 1994
Referred to Committee Mar 16, 1994
Full Title

To amend the Internal Revenue Code of 1986 to reform the rules regarding subchapter S corporations.


No summaries available.

65 cosponsors (37R, 28D) (show)

House Ways and Means

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Primary Source

THOMAS.gov (The Library of Congress)

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H.R. stands for House of Representatives bill.

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The bill’s title was written by its sponsor.

GovTrack’s Bill Summary

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Library of Congress Summary

The summary below was written by the Congressional Research Service, which is a nonpartisan division of the Library of Congress.

Title I - Eligible Shareholders of S Corporation Subtitle A: Number of Shareholders Subtitle B: Persons Allowed as Shareholders Subtitle C: Other Provisions Title II: Qualification and Eligibility Requirements for S Corporations Subtitle A: One Class of Stock Subtitle B: Elections and Terminations Subtitle C: Other Provisions Title III: Taxation of S Corpporation Shareholders Title IV: Effective Date S Corporation Reform Act of 1993
Title I - Eligible Shareholders of S Corporation
Subtitle A - Number of Shareholders
Amends the Internal Revenue Code to increase from 35 to 50 the maximum number of shareholders of an S corporation (small business corporation). Allows members of a family to be treated as one shareholder.
Subtitle B - Persons Allowed as Shareholders
Allows the following entities to be shareholders of S corporations: (1) certain tax-exempt organizations; (2) financial institutions that do not use the reserve method of accounting for bad debts; (3) nonresident aliens; and (4) certain small business trusts.
Subtitle C - Other Provisions
Extends the post-death qualification for certain trusts to be permitted as shareholders from 60 days to two years.
Title II - Qualification and Eligibility Requirements for S Corporation
Subtitle A - One Class of Stock- Allows an S corporation to issue qualified preferred stock. Permits financial institutions to hold safe harbor debt. Subtitle B: Elections and Terminations
Revises the rules on inadvertent terminations by certain trusts of the election to be an S corporation.
Authorizes the Secretary of the Treasury to treat certain late elections as timely and to provide an automatic waiver procedure for certain inadvertent terminations.
Expands the post-termination transition period until 120 days after a determination is made that the election had terminated in a prior year.
Repeals excessive passive investment income as a termination event.
Increases the tax imposed on such excessive income.
Subtitle C - Other Provisions
Permits an S corporation to own more than 80 percent of another corporation's stock.
Repeals the requirement that partnership rules apply for fringe benefit purposes (making C corporation rules applicable).
Provides for the treatment of distributions during loss years.
Provides a consent dividend for S corporation elections to by-pass amounts in the accumulated adjustments account when making distributions.
Eliminates the need to keep records of certain generally small amounts of earnings arising before 1983.
Allows S corporations to make charitable contributions of inventory and scientific property.
Title III - Taxation of S Corporation Shareholders
Treats losses on liquidations of S corporations as ordinary to the extent the loss created by ordinary income pass-through triggered the liquidation.
Title IV - Effective Date
Makes this Act effective after December 31, 1994.

House Republican Conference Summary

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No summary available.

House Democratic Caucus Summary

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