Comments on: Build Back Better S Corporation Tax Hits High Income Taxpayers https://evergreensmallbusiness.com/build-back-better-act-hits-s-corporations-active-real-estate-investors/ Actionable Insights from Small Business CPAs Tue, 16 Nov 2021 13:50:13 +0000 hourly 1 https://wordpress.org/?v=6.9.4 By: Stephen Nelson CPA https://evergreensmallbusiness.com/build-back-better-act-hits-s-corporations-active-real-estate-investors/#comment-10708 Tue, 16 Nov 2021 13:50:13 +0000 https://evergreensmallbusiness.com/?p=15918#comment-10708 In reply to Jerry Seo.

I don’t think moving the real estate out of the S corporation makes a difference in terms of NIIT if BBB passes.

With BBB, the client potentially pays NIIT either way.

I.e., client pays NIIT on real estate investment income if it comes through S corp. And client pays NIIT on real estate investment income it she or he owns property directly.

P.S. It would be interesting to think about trying to accelerate gains into 2021 and thereby avoiding paying NIIT that starts in 2022. And one way to do that would be to distribute appreciated real estate out of the S corporation. I wonder if this is what you’re pondering. (I do think for affected taxpayers that that sort of thinking can be very impactful.)

]]> By: Jerry Seo https://evergreensmallbusiness.com/build-back-better-act-hits-s-corporations-active-real-estate-investors/#comment-10707 Tue, 16 Nov 2021 00:45:08 +0000 https://evergreensmallbusiness.com/?p=15918#comment-10707 I have a client with real estate rental properties in an S Corp. How about him distributing his properties to himself personally, then trying to qualify himself as a real estate investor? If he doesn’t have enough basis in the S Corp, what do you think of the S Corp selling the properties to him at a minimal gain, perhaps on installment, to escape the capital gain from the excess distribution?

Thanks in advance for your reply.

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