What are the 2008 Important Tax law changes applicable to S Corporations?
The IRS has announced several Tax law changes in tax year 2008 that are applicable to S Corporations. Some of those important tax law changes for filing S Corporation tax returns are listed below.
1. Revised Late Filing Penalties for 2008
If the S Corporation has no tax liability due, “the late filing penalty for returns required to be filed after 2008 increased to $89 for each month or part of a month (up to 12 months) the return is late or does not include the required information, multiplied by the total number of persons who were shareholders in the corporation during any part of the corporation's tax year for which the return is due.”
If the S Corporation has a tax liability due, “the minimum additional late filing penalty for filing returns after 2008 more than 60 days late increased to $135 or the balance of the tax due on the return, whichever is smaller.”
2. Extension of Deductions and Credits for 2008
The IRS has announced that the following deductions and credits have been extended.
• The deduction for charitable contributions of certain food inventory.
• The reduction of S corporation stock basis using the adjusted basis, instead of the fair market value, of contributed property.
• The R & D research credit.
• The Indian employment credit.
• The qualified railroad track maintenance credit.
• The energy efficient appliance credit.
3. Introduction of Tax Credits in 2008
The The IRS has announced some new tax credits for 2008. These are as follows;
• The retention credit and housing credit for affected employers is reported on Form 5884-A, Credits for Affected Midwestern Disaster Area Employers.
• The cellulosic Biofuel fuel credit is reported on Form 6478, Alcohol and Cellulosic Biofuel Fuels Credit.
• Holders of new clean energy, Midwestern tax credit, qualified energy conservation, or qualified forestry conservation bonds may be able to claim a credit on Form 8912, Credit to Holders of Tax Credit Bonds.
• The agricultural chemicals security credit is reported on Form 8931, Agricultural Chemicals Security Credit.
• The credit for employer differential wage payments is reported on Form 8932, Credit for Employer Differential Wage Payments.
• The carbon dioxide sequestration credit is reported on Form 8933, Carbon Dioxide Sequestration Credit.
4. New codes added to box 12 of the K-1
A new code G was added for box 12 of Schedule K-1 to report certain charitable contributions for which the AGI limitation has been suspended. Use code G to report (a) qualified cash contributions for relief efforts in Midwestern disaster areas and (b) qualified conservation contributions of property used in agriculture or livestock production.
5. New codes added to box 13 of the K-1
The IRS has announced that codes C and D are now added for box 13 of Schedule K-1 to report additional information on the low-income housing credit. The credit attributable to buildings placed in service after 2007 is subject to new limitation rules and must be reported separately on Form 8586, Low-Income Housing Credit.
6. A new Code P now added to box 13 of the K-1
The IRS has announced that codes used to report the welfare-to-work credit and the new markets credit on Schedule K-1 have now changed. These credits are now reported in box 13 using code P.