Proposed Treasury Regulations Would Limit Shareholders' Use of Open Account Debts to Absorb S Corporation Losses
September 19, 2007 — 758 views
The IRS proposed regulations on April 11, 2007, that would limit the use of “open account debt” to pass through S corporation losses to shareholders. The proposed regulations under Section 1367 of the Internal Revenue Code address an IRS concern that S corporation shareholders are manipulating their tax bases in so-called “open account debts” (loans by shareholders to the S corporation that are not evidenced by separate written instruments) to defer taxable income.
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