Politico: Morning Tax
Democratic Daylight on Treasury Rules
By: Bernie Becker - 6/23/16
BACK TO 385: Business groups that represent multinational corporations, like the Business Roundtable, have gotten a lot of the attention as opposition to those rules has grown. But groups like the S Corporation Association, which represents businesses that aren’t usually associated with earnings stripping, are trying to more loudly make their case that the rules would affect a wide cross-section of companies. “These regs are not limited to international activities,” said Brian Reardon, the S Corp group’s president. “It’s a tool they could use on international matters, but it’s not limited to that.”
Reardon and his group also say that the rules could be especially damaging to S corps, which are only allowed to have one class of stock. If some of a company’s debt is reclassified as equity, that could give an S corp a second class of stock, Reardon told Morning Tax. And if an S corp loses its status, it could either enter a potentially costly and long appeal with the IRS to restore it, or just become a corporation — neither a really appealing option, Reardon added.
Source: Politico Morning Tax