1120-US: S Corporation not a member of a controlled group (FAQ)

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Question

Why isn't an S Corporation a member of a controlled group?

Answer

Under IRC Regulation 1.1563-1(b)(2)(ii)(C), an S Corporation is treated as an excluded member of a controlled group. An S Corporation is not subject to any tax to which the tax bracket amounts of Section 11(b)(1) apply, or any other tax benefit item to which Section 1561(a) applies. Therefore, you can treat S Corporations as an excluded member of a controlled group.

Because an S Corporation is not included in a controlled group, Schedule O, consent Plan and Apportionment Schedule for a Controlled Group, does not apply. Also, an S Corporation is not required to apportion the Section 179 deduction.

Related topic: 1120-US: Controlled group FAQs

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