Course ID: USCT

Understanding S-Corp Taxation – Shareholder Basis, AAA & Retained Earnings

Even though they have been around for several years, the tax laws pertaining to S-Corporations remain some of the more difficult areas of the Internal Revenue Code. Given the rising popularity of S-Corporations, understanding how shareholder basis and the equity section of the balance sheet work together for tax purposes is imperative for nearly any tax practitioner. In this course, we will discuss this relationship. Using examples and illustrations, we will show how contributions, operating transactions, and distributions affect both shareholder basis as well as equity.

Learning Objectives

After completing this course, you will be able to:
•Recognize the formula for calculating S-Corp Shareholder basis
•Identify the items of income and deduction that are allocated to AAA, PTI, AE&P, and OAA
•Estimate the tax effects of a distribution on shareholder basis and AAA.

Major Topics
  • S-Corporation Earnings Layers
  • Observations on Earnings Layers
  • S-Corp Basis Calculation
  • IRC 351 Transactions
  • Four Loss Tiers
  • Comprehensive Examples
  • Appreciated Property Distributions

Who Should Attend

CPAs and tax practitioners who work with S-Corporation business clients and S-Corporation shareholders

Fields of Study


Basic understanding of flow-through entity taxation

Business Learning Institute

CPE Credits


This course is available for your group as:


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