S Corporation Taxation [CPA Prep]

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🎓 Lesson Overview:
In this lesson, Nick Palazzolo, CPA, takes a deep dive into the intricacies of S Corporation taxation, emphasizing the pass-through nature of these entities and the specific circumstances under which they may owe taxes. He breaks down the built-in gains tax, highlighting scenarios in which an S-Corp might be subject to this tax if it sells appreciated assets within five years of its election to become an S-Corp. Nick also explains the somewhat esoteric LIFO recapture tax, outlining instances where it's applicable and the rationale behind its enforcement. Further along, he delves into examples that bring clarity to situations involving these taxes, ensuring a comprehensive understanding of when and how they may impact an S-Corp's taxation. The lesson wraps up emphasizing that while S-Corporations usually avoid federal income taxes at the corporate level, certain exceptions-like the built-in gains tax-must be navigated carefully.
🔍 Key Topics Covered:
- S Corporation Taxation
- Pass-Through Taxation
- Built-In Gains Tax
- LIFO Recapture Tax
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