Reminder of January 17, 2012 Filing Date for Corporations
Under Internal Revenue Code (IRC) section 6045B – in force since the beginning of 2011 – any corporation completing an organizational action which affects the basis for U.S. tax purposes of shares of stock held by U.S. persons must generally, with certain exceptions noted further below:
- file Form 8937 with the Internal Revenue Service (IRS) within 45 days after the date of the action and
- provide by January 15 of the following year a statement to each shareholder as of the date of the action and all shareholders owning stock during the subsequent period up to the date the statements are issued.
However, for actions during 2011, a corporation may file Form 8937 and issue statements to shareholders by not later than January 17, 2012. Moreover, the IRS has indicated it will not impose penalties for reporting incorrect information for 2011 actions provided the corporation makes good-faith efforts to meet this deadline.
Observation: On January 13, 2012, the IRS issued Notice 2012-11, 2012-5 IRB, providing last-minute additional transitional relief from reporting, including certain of the points noted just above – this can be seen by clicking here.
The statute does not define such an organizational action, but the final regulations and legislative history indicate that this includes a stock-split, merger, stock-for-stock or stock-for-assets reorganization, spin-off or split-off, stock redemption, or distribution in excess of the corporation’s earnings and profits.
Form 8937 and Shareholder Statements
Form 8937, Report of Organizational Actions Affecting Basis of Securities, includes a description of the action, its quantitative effect on the tax basis of the corporation’s stock, and how the effect was calculated. The statement provided to shareholders should contain the same information.
First, a corporation can fulfill the above obligations by making Form 8937 available on its corporate website within the prescribed filing deadline and maintaining it there for at least 10 years.
Observation: This is an efficient alternative to the basic requirements and is being used by many corporations.
Second, a corporation is not required to furnish a statement to any shareholder who is an exempt recipient and, if all of its shareholders are exempt recipients, it is not required to file Form 8937. Such exempt recipients include:
- Corporations or entities treated as corporations for U.S. federal income tax purposes
- Foreign persons
- Tax-exempt organizations under IRC section 501(a).
Third, an S-corporation can satisfy its filing and shareholder requirements by reporting the effect of an organizational action on a timely filed Schedule K-1 (Form 1120S) for each shareholder and timely providing copies to all proper parties.
This publication is intended to provide general information to our friends. It does not constitute accounting, tax, or legal advice; nor is it intended to convey a thorough treatment of the subject matter.