Unified Passthrough Reform Misses the Mark
15 Pages Posted: 6 May 2015 Last revised: 29 Sep 2015
Date Written: March 16, 2015
This article considers recent proposals to replace subchapters K and S with a unified passthrough system. It argues that resistance to a unified approach may pave the way for further expansion of subchapter S and discusses proposed fixes to the section 1374 tax on built-in gains. The article suggests that proposed mandatory basis adjustments under subchapter K, unless coupled with partial liquidation treatment, would introduce needless complexity. Finally, the article considers the possibility of eliminating subchapter K and expanding subchapter S to include as many privately held businesses as possible.
Keywords: Camp proposals, partnerships, S corporations, employment taxes, 1374 tax, mandatory basis adjustments, corporate tax reform
JEL Classification: K34
Suggested Citation: Suggested Citation