Introduction to S Corporations & LLC’s – Part 2

Lecture Content

S corporations and Limited Liability Companies (LLC) are common entity choices for small business owners. S corporation shareholders and LLC members often benefit from certain tax advantages that are available to them. At the same time failure to correctly adhere to tax laws affecting these entity types can result in erroneous tax return filings that can result in significant IRS penalties.

Introduction to S Corporations and LLCs is a two-part series which provides tax professionals with an in-depth look at the rules for preparing forms 1120S and 1065.

* Part 1 focuses on entity classification choices and instructions for completion of Form 1065, US Return of Partnership Income.
* Part 2 focuses on preparation of Form 1120S, US Income Tax Return for an S Corporation.

Topics Covered

* A summary review of different entity types and entity classification election
* Review of classwork answer key from Introduction to S corporations and LLCs Manual Part 1
* Overview of the rules for making the election to be taxed as an S corporation
* Preparation and filing instructions for Form 2553 Election by a Small Business Corporation
* Rules for late filing relief with respect for Form 2553
* Rules for reporting income and expenses of an S corporation
* Payment of corporate taxes
* A comparison of similarities and differences with respect to reporting items on Forms 1065 and 1120S
* Line-by-line-instructions for reporting income and expenses of an S corporation on Form 1120S
* Instructions for completion of Schedules K and K-1 – Shareholders’ Pro-Rata Share items
* Schedule L, corporation’s Balance Sheet per Books
* Schedule M-1, Reconciliation of Income (Loss) per Books with Income (Loss) per Return
* Schedule M2, Analysis of Accumulated Adjustments Account (AAA), Other Adjustments Account (OAA), and Shareholder’s Undistributed Income Previously Taxed (PTI)
* Tracking shareholder basis
* Stock and debt basis rules
* Reasonable compensation payroll reporting requirements pertaining to S corporation shareholders

You can purchase the manual for this course for $5.99 at

Pacific Northwest Tax School is approved by the following organizations as a provider of continuing education:

* The IRS
* NASBA QAS (NASBA Sponsor #109290),
* Oregon Tax Board,
* The Texas State Board of Public Accountancy (Texas Sponsor #009794)
* The New York State Board for Public Accountancy (Sponsor License #002479)

You can receive 6 hours of CE for $90 by enrolling in this course at

Terms of Use or Enrollment

Pacific Northwest Tax School’s course materials and teaching techniques are valuable proprietary information of Pacific Northwest Tax School, and all such information is subject to copyright, including written, recorded, internet based as well as all other electronic media. Each Student agrees that she/he will use the information only for purposes of education and training; and as a condition of enrollment, that they will not disseminate the information to any third party and will treat the materials as confidential information of Pacific Northwest Tax School. As a condition of enrollment, Students pledge not use any information in any competitive fashion, including to create or derive competitive materials. Students further agree that any breach of these terms and conditions shall cause the school irreparable harm, entitling Pacific Northwest Tax School to injunctive relief, as well as any other remedy that may be available at law or equity. Students shall have twelve months from date of enrollment in any continuing education course, to successfully complete the course and receive their Certificate of Completion.