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S Corporation Reforms: Shareholder Death, Passive Income, and Eligibility

This act introduces changes to S corporation rules, simplifying operations and management. It includes new tax rules for gains after a shareholder's death, modifies passive income regulations, and expands the types of eligible shareholders. The goal is to streamline regulations and reduce administrative burdens for small business owners.
Key points
New tax deductions for S corporation built-in gains upon a shareholder's death, impacting inheritance and estate planning.
Increased passive investment income limit for S corporations from 25% to 60%, offering greater business flexibility.
Nonresident aliens and Individual Retirement Accounts (IRAs) are now permitted as S corporation shareholders, opening new investment avenues.
Simplified shareholder counting rules, treating all employees of a firm as a single shareholder, easing compliance with limits.
article Official text account_balance Process page
Introduced
Citizen Poll
No votes cast
Additional Information
Print number: 119_S_2017
Sponsor: Sen. Sheehy, Tim [R-MT]
Process start date: 2025-06-10
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Summarized by: gemini-2.5-flash-preview-05-20
Source data: api.congress.gov
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OFFICIAL LEGAL TITLE

S Corporation Modernization Act of 2025

FREQUENTLY ASKED QUESTIONS

What is the official ID of this bill?

The official print number for this legislation is 119_S_2017.

Which chamber initiated this legislation?

This legislation was initiated in the Senate.

When did the legislative process begin?

The process officially started on 2025-06-10.

What are the main provisions?

Key points include:

  • New tax deductions for S corporation built-in gains upon a shareholder's death, impacting inheritance and estate planning.
  • Increased passive investment income limit for S corporations from 25% to 60%, offering greater business flexibility.
  • Nonresident aliens and Individual Retirement Accounts (IRAs) are now permitted as S corporation shareholders, opening new investment avenues.
  • Simplified shareholder counting rules, treating all employees of a firm as a single shareholder, easing compliance with limits.
What is the specific legal status?

The current status is Introduced.

Where can I read the full text of this legislation?

The full official text is available at: View full text

Who is the primary sponsor?

The primary sponsor is Sen. Sheehy, Tim [R-MT].

What is the latest detailed status?

The latest detailed status is: Introduced in Senate

Is this summary verified?

Yes. This content was analyzed by AI and verified by the Lustra Judge System on 2025-12-23.

CATEGORIES

Taxes Economy