S Corporation Modernization Act of 2016 2016-07-13 Introduced in House S Corporation Modernization Act of 2016

This bill amends the Internal Revenue Code, with respect to the tax treatment of S corporations, to:

  • allow a nonresident alien to be a qualifying beneficiary of an electing small business trust (ESBT), which is a type of trust that is permitted to hold shares in an S corporation;
  • allow S corporations to increase passive investment income from 25% to 60% without incurring additional taxes;
  • eliminate a provision terminating the S corporation status of corporations with excessive passive income for three consecutive years;
  • allow any S corporation bank to have individual retirement account shareholders;
  • allow ESBTs to claim expanded tax deductions for charitable contributions; and
  • allow an adjustment to the basis of an S corporation's assets upon the death of a shareholder, in the form of a 15-year amortization deduction.
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