Reforming Entity Taxation: A Role for Subchapter S?

18 Pages Posted: 18 Mar 2015

See all articles by Deborah Schenk

Deborah Schenk

New York University School of Law

Date Written: March 9, 2015


The article asks whether a role remains for subchapter S in reforming the taxation of corporations. It considers whether all three approaches to taxing entities — subchapters C, K, and S — remain necessary and whether as part of reform, some simplification is possible or desirable. The conclusions are summarized as follows: (1) Corporate tax reform for large publicly held corporations cannot be divorced from individual tax reform — the relationship of rates matters. (2) In the absence of corporate integration (that is, two levels of tax are retained), conduit taxation for some business entities is desirable. (3) While ideally, one uniform system of conduit taxation for entities not subject to subchapter C might be highly attractive, any uniform system complex enough to deal with complicated business arrangements is too complex for simple arrangements. Thus, a two-track conduit system is appropriate. (4) While subchapter S might not have been the design choice ex ante, it has become a coherent and administrable version of a simpler conduit system. (5) Subchapter S should not be turned into subchapter K.

Keywords: Taxation, Tax Reform, Subchapter S

JEL Classification: H24, H25

Suggested Citation

Schenk, Deborah, Reforming Entity Taxation: A Role for Subchapter S? (March 9, 2015). Tax Notes, Vol. 146, No. 9, 2015. Available at SSRN:

Deborah Schenk (Contact Author)

New York University School of Law ( email )

40 Washington Square South
New York, NY 10012-1099
United States
212-998-6163 (Phone)

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