S Corporations. 1. All S Corporations may distribute any previously taxed earnings as of June 30, 1997, to the extent of nonoperating net assets (as disclosed in the Schedules to the definitive agreement) and excess cash, plus any remaining excess cash (as set forth on the next page). To the extent nonoperating assets and cash are not sufficient to fund a portion of the distribution of previously taxed earnings, the company may complete the distribution by issuing a note payable to shareholders which will be funded by IES as soon as practical after the consummation date.
S Corporations. (5) Joint returns.
S Corporations. If at the time of Trustor’s death, Trustor shall hold any stock in a corporation that has continued its election to be taxed under Sections 1371 through 1379 of the Internal Revenue Code of 1986, as amended, then the Trustee may, in the Trustee’s sole discretion, within sixty (60) days of the date of Trustor’s death, (or such longer or shorter time period as may be established by law), affirmatively refuse to consent to the continuation of such election and may at any time take such other action with respect to the election as Trustee shall deem appropriate, and the determination of the Trustee shall be binding upon all persons having any interest under this Trust. The Trustee is further authorized, in the Trustee’s sole discretion, to cause any corporation whose shares are being held as an asset of the trust estate to be taxed pursuant to the provisions of Section 1371 through 1379 of the Internal Revenue Code of 1986, as amended. The Trustee shall have the power and discretion to divide any trust created under this instrument which may hold or be designated to hold S corporation stock into separate trusts which provide income and principal distributions for but one beneficiary (if such is required to maintain or enhance the benefit of the S corporation election of the corporation or prevent adverse tax consequences to the trust) and which otherwise qualify to be a shareholder of an S corporation under applicable law, but which otherwise are as close as possible to the terms of the original trust being so divided.
S Corporations. The Corporations have both elected to be treated as S -------------- Corporations within the meaning of the Federal Income Tax Code of 1986, as amended. Such elections have been made for the years listed on Schedule 3.38.
S Corporations. A substantial line of authority interpreting the definition of the term “rents” for purposes of the statutory provisions relating to subchapter S corporations (“S corporations”) also supports treatment of the Charter Fees as services income, rather than as rental income, for federal income tax purposes. Code section 1375 imposes a corporate tax on S corporations that were formerly C corporations and derive more than 25 percent of their gross receipts in any taxable year from “passive investment income.” The term “passive investment income” is statutorily defined to expressly include “rents” but does not include income derived from the performance of services.17 The applicable Treasury regulations define the term “rents” to mean amounts received for the use of, or right to use, real or personal property other than rental income derived in the active conduct of trade or business and provide that a taxpayer is engaged in such conduct if it provides “significant services” and incurs substantial costs in connection with its lease of property.18 As discussed more fully below, the IRS and the courts have held that income derived from time and voyage charters of ships and rents received from the chartering of aircraft where the owner provides significant services to the charterer do not constitute “rents” for purposes of the statutory provisions concerning S corporations. 16 See Code § 887.
S Corporations. 25 Section 338(h)(10) Elections ...................................................................................................................... 39 Section 338(h)(10) Forms ........................................................................................................................... 39 Securities ....................................................................................................................................................... 1 Seller ............................................................................................................................................................. 1
