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US SB2017
Bill
AI Summary
- Allows S corporation shareholders who inherit stock to claim a tax deduction for built-in gains on corporate assets, amortized over 15 years or accelerated upon disposition of the property
- Increases the passive investment income threshold from 25% to 60% of gross receipts before triggering additional taxes, and eliminates excessive passive income as grounds for automatic termination of S corporation status
- Permits nonresident alien individuals to own S corporation stock, with new withholding tax requirements on their pro rata share of effectively connected income at the highest individual tax rate
- Treats all employees of a corporation and its wholly owned entities as a single shareholder for purposes of the 100-shareholder limit, and expands eligible shareholders to include individual retirement accounts (IRAs)
- Allows transfer of suspended losses to a surviving spouse or heir upon a shareholder's death, and repeals Section 409A rules governing nonqualified deferred compensation plans effective for taxable years beginning after December 31, 2025
Legislative Description
S Corporation Modernization Act of 2025
Taxation
Last Action
Read twice and referred to the Committee on Finance.
6/10/2025
Committee Referrals
Finance6/10/2025
Full Bill Text
No bill text available