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11. Tax Ramifications of S Corporation Shareholder Termination or Change of Ownership Interest

Elizabeth Conner, University of Colorado – Denver

Doug Laufer, Metropolitan State University of Denver

Introduction

Under U.S. tax law, there are four choices for the type of business entity: sole proprietorship, partnership, limited liability company, and corporation. Within the fourth choice (corporation), there is an additional option, a C corporation or S corporation. The names denote subchapters of the Internal Revenue Code that contain the “rules” for each type of corporation.

C corporations include all publicly traded corporations and many privately held companies as well. A C corporation can have an unlimited number of shareholders, has limited ...