Rev Rul 2019-13 provides guidance on how redemption distributions affect AAA during the PTTP

S Corporations
Written By M Andrew Vance CPA, P.A.

The IRS has issued Rev Rul 2019-13 that provides guidance on the reduction of AAA when a former S corporation distributes cash in redemption of a shareholder’s stock during the corporation’s post-termination transition period (PTTP).

If, during a former S corporation's PTTP, the corporation distributes cash in redemption of a shareholder's stock, which is characterized as a distribution subject to IRC §301, the corporation should reduce its AAA to the extent of the proceeds of the redemption pursuant to IRC §1368. The remaining amount of the distribution is characterized as a dividend under IRC §301(c)(1).

M Andrew Vance CPA, P.A.

I help small business owners and individuals by providing expert tax preparation, strategic consulting, and ongoing financial guidance. As a dedicated CFO partner, I work closely with clients to simplify complex tax matters, identify growth opportunities, and improve overall business performance.

https://www.Vance-CPA.com
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