Number of employees
1-5
Curtis & Co
- 109 Westpark Dr Ste 400
- Brentwood, Tennessee
- 37027
- Phone: (615) 377-1308
- Fax: (615) 370-4560
- Website
Description
As mentioned above, S corporation status will terminate if passive income exceeds 25 percent of gross receipts for three consecutive years. In addition, the passive income S corporation tax may apply. Loan-out corporations that convert to S corporation status must deal with this issue. Many times, the loan-out corporation has accumulated earnings from its days as a regular C corporation. As such, the imposition of the passive income S corporation tax, as well as termination of the S election, are real risks.
At times, payments may be split into both royalties and non-employee compensation. Such may be the case in the co-owner publishing arrangement mentioned above. Because payments to producers and recording artists are classified by the IRS as compensation for services, the personal holding company income problems should not be present concerning royalties. Personal service contract income could still be problematic. Also, the payments shouldn't be passive income for purposes of S corporation rules, thus allowing the conversion of C corporation status to S corporation status.
Fact sheet
Company contacts
- Richard Curtis
- Owner