Revised Tax Return Due Dates for Partnerships and C Corporations

President Obama signed the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 (“Act”) into law on July 31, 2015. The Act includes a series of revised tax return filing deadlines for partnerships and C corporations.

Returns for partnerships and entities taxed as a partnership filing a Form 1065 are due March 15 or the 15th day of the third month following the end of the organization’s fiscal year. The previous due date was April 15. Extensions are available for up to six months.

Returns for C corporations and entities taxed as a C corporation filing a Form 1120 are due April 15 or the 15th day of the fourth month following the end of the organization’s fiscal year. The previous due date was March 15. Returns for C corporations with a fiscal year ending on June 30 are due on September 15 until 2025. After 2025, the returns are due on October 15. Most C corporations can receive extensions of up to five months until 2026. After 2026, all C corporations can receive extensions for up to six months.

Tax returns for S corporations remain unchanged and are due on Mach 15 or the 15th day of the third month after the end of the organization’s fiscal year.

The new dates are effective for tax years beginning after December 31, 2015. These changes are not applicable to most filers until tax returns for 2016 are due in 2017, excluding short year filings.

© 2016 Vandenack Williams LLC
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100% Exclusion for Qualified Small Business Stock Held for Five Years

Starting a small business is full of challenges and an entrepreneur will have many concerns, especially with ensuring adequate operating capital and meeting funding requirements. The federal government does recognize the importance of small business and the challenges faced by entrepreneurs, including cash issues, and reacted by making permanent the 100% qualified small business stock (QSBS) exclusion in December of 2015.

Originally, in 1993, Section 1202 of the Internal Revenue Code was enacted, encouraging investment in small business by excluding 50% of capital gains from the sale of QSBS held for 5 years. Over the years, the exclusion changed and evolved until 100% of capital gains from the sale of QSBS held for 5 years was excluded, if the required conditions were met. The 100% exclusion was set to expire at the end of 2015, but the exclusion was made permanent in the Protecting Americans from Tax Hikes (PATH) Act, enacted in December 2015.

The 100% QSBS exclusion, although permanent, is nuanced and the stock itself must be held for five years, be in a C corporation, be in a Corporation with less than $50 million of assets at the time the stock was issued, have acquired the stock at its original issue, and have over 80% of the corporation assets being used in the active conduct of a qualified business during the entire time holding the stock. Active conduct is similarly defined under the tax code, excluding investment vehicles, brokerage services, farming business, and other inactive business. For those looking to utilize the QSBS exclusion or attract new capital from investors under this exclusion, a proper evaluation should be conducted to ensure the stock qualifies.

© 2016 Vandenack Williams LLC
For more information, Contact Us