Examining s-corporation losses and how they are used Katherine Lim, Elena Patel and Molly Saunders - Scott
By: Lim, Katherine
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Contributor(s): Patel, Elena Spatoulas | Saunders Scott, Molly J.
Material type: 
ArticlePublisher: 2018Subject(s): IMPUESTOS | PERDIDAS | SOCIOS | SOCIEDADES COLECTIVAS | SOCIEDADES DE RESPONSABILIDAD LIMITADA | SISTEMA FISCAL | REFORMA | ESTADOS UNIDOSOnline resources: Click here to access online
In:
National Tax Journal v. 71, n. 4, December 2018, p. 661-686Summary: Symmetric treatment of business losses would allow businesses in loss to claim an immediate tax refund. Instead, the U.S. tax system allows for businesses of all forms to use losses to offset positive income in other periods and the owners of pass-through businesses to offset current-year income from other sources. Little is known about how the losses of pass-throughs, including S corporations, are used. In this paper, we use administrative tax data to trace entity-level S-corporation losses through to their owners. We find that the owners of S corporations are able to use a large fraction of losses in the year that the loss occurs, ranging from a low of 49 percent in 2009 to a high of 68 percent in 2005. Because the lack of an immediate tax refund for losses can distort business decisions, that high current-year usage suggests that the tax treatment of losses may have less of a distortionary effect on the business and investment decisions of S corporations.
| Item type | Current location | Home library | Call number | Status | Date due | Barcode |
|---|---|---|---|---|---|---|
| Artículos | IEF | IEF | OP 233/2018/4-5 (Browse shelf) | Available | OP 233/2018/4-5 |
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Resumen.
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Symmetric treatment of business losses would allow businesses in loss to claim an immediate tax refund. Instead, the U.S. tax system allows for businesses of all forms to use losses to offset positive income in other periods and the owners of pass-through businesses to offset current-year income from other sources. Little is known about how the losses of pass-throughs, including S corporations, are used. In this paper, we use administrative tax data to trace entity-level S-corporation losses through to their owners. We find that the owners of S corporations are able to use a large fraction of losses in the year that the loss occurs, ranging from a low of 49 percent in 2009 to a high of 68 percent in 2005. Because the lack of an immediate tax refund for losses can distort business decisions, that high current-year usage suggests that the tax treatment of losses may have less of a distortionary effect on the business and investment decisions of S corporations.
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