AICPA seeks S corp allowances
The American Institute of CPAs wrote to Congress this week supporting the inclusion of language that would allow S corporations to grow and attract capital from foreign sources in the small business tax package incorporated in H.R. 2206, the bill to provide supplemental funds for the war in Iraq, currently being considered by Congress.
The AICPA said H.R. 1591, as passed by the Senate on March 29, 2007, “contained a provision within the small business tax package entitled ‘Expansion of qualifying beneficiaries of an electing small business trust’ that would allow nonresident aliens to be ‘potential current beneficiaries’ of electing small business trusts (ESBTs). This provision would help relieve S corporations from the current prohibition against nonresident alien shareholders. H.R. 2206 does not contain this provision and we ask that it be restored to the package.”
The AICPA also said it “supports a complete elimination of the nonresident alien S corporation shareholder restriction as outdated and unnecessary. The ESBT provision would be a major step toward eliminating the restriction.” “In addition,” the letter said, “because an ESBT pays tax at the highest rate, there is no revenue loss as a direct result of allowing nonresident aliens as ESBT potential current beneficiaries.”