Willard Taylor Reviews Changes to Taxation of Passthrough Entities in Tax Notes Article

June 6, 2013

In a Special Report entitled, “Subchapter S Out the Window? What’s Going On,” published by Tax Notes, Mr. Taylor discusses the changes to the taxation of non-publicly traded passthrough entities, i.e., privately held partnerships and S corporations, that are proposed in a House Ways & Means Committee draft released in March. The article summarizes two legislative options that the House Ways and Means Committee is considering. While the first option would include specific changes to the S corporation and the subchapter K partnership rules, the proposals are not new and are relatively modest. Option two, on the other hand, would include the option one changes, but also redo subchapters K and S and provide a single set of rules for all non-publicly traded and some publicly traded passthroughs. This option would significantly change the treatment of partnerships and non-publicly traded corporations that elect to be passthroughs, and the article endorses its approach, as well as the implication that it would eliminate different income and payroll tax rules for S corporations and partnerships.