Abstract
Congress should radically reshuffle the respective jurisdictions of subchapters K, S, and C. Form of organization should no longer play any role in an entity's tax classification. Subchapter K should only remain available to service entities for which capital is not a material income-producing factor. The more restrictive conduit regime of subchapter S should be opened to all private business fins with simple capital structures and should be revised to incorporate as much of the flexibility of subchapter K as is possible without making it unreasonably susceptible to abuse. All firms with more complex ownership structures should be subject to subchapter C, but the incomes of private business firms within subchapter C should only be taxed once. The taxable income of a private C entity should be determined without deduction for interest expense, and returns received by the entity's owners and creditors (e.g., dividends and interest) should be exempt from tax.
Recommended Citation
Lokken, Lawrence
(2001)
"Taxation of Private Business Firms: Imagining a Future Without Subchapter K,"
Florida Tax Review: Vol. 4:
No.
1, Article 5.
Available at:
https://scholarship.law.ufl.edu/ftr/vol4/iss1/5