Don Farmer's Top 10 S Corporation Return Issues and How to Avoid Them

Overview

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S corporation tax returns present recurring technical and compliance challenges that can expose shareholders and practitioners to costly errors. From basis limitations and shareholder distributions to reasonable compensation and built-in gains tax, small missteps can result in significant tax adjustments, penalties, and IRS scrutiny.
This focused 2-hour program examines the ten most common S corporation return issues encountered by practitioners and provides practical guidance on how to identify, prevent, and correct them. Participants will review shareholder basis calculations, loss limitations, compensation requirements, eligibility rules, and reporting pitfalls frequently identified during IRS examinations.
Through real-world examples and case-based discussion, attendees will gain actionable strategies to improve accuracy, strengthen documentation, and reduce audit risk in S corporation engagements.

Delivery Method: Group internet-based
CPE Credit: Taxes
Program Level: Intermediate

Virginia Society of CPAs is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State Boards of Accountancy have the final authority on the acceptance of individual course for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org

Highlights

Overview of S Corporation Compliance Framework

Eligibility requirements under IRC §1361
One class of stock rule
Shareholder limitations
Election considerations and termination risks

Top 10 common S Corporation Return Issues:

Failure to Properly Track Shareholder Basis
Improper Deduction of Losses Without Sufficient Basis
Distributions in Excess of Basis
Inadequate Reasonable Compensation
Shareholder Loans Misclassified or Poorly Documented
Built-In Gains (BIG) Tax Issues
Passive Investment Income and Termination Risk
Improper Allocation of Income and Expenses
Fringe Benefits and Shareholder-Employee Issues
State Tax and Composite Filing Oversights

Prerequisites

Designed For

Objectives

Upon completion of this program, participants will be able to:

Identify common technical and reporting errors on S corporation tax returns.
Calculate shareholder stock and debt basis and determine the impact on loss deductions and distributions.
Recognize reasonable compensation requirements and related payroll compliance risks.
Determine eligibility and operational requirements necessary to maintain S corporation status.
Apply best practices to reduce audit exposure and improve return accuracy.