[Verse 1]
Small business owners, gather 'round today
There's a special election that can save you pay
S Corporation status, it's a different way
To pass through your profits without double tax to pay
One hundred shareholders max, that's the golden rule
One class of stock only, keep it simple, cool
US citizens and residents, they're the only pool
Corporations and partnerships? Sorry, not the tool
[Chorus]
S Corp election, Section thirteen-sixty-two
Pass it through, pass it through, like partnerships do
Stock basis, debt basis, keep them straight and true
AAA, PTI, E and P in order due
S Corp election, make your choice today
Save on taxes, let the profits flow your way
[Verse 2]
File that form by March fifteenth, don't be late
All shareholders must agree to seal the fate
If you mess up the election, don't despair and wait
Inadvertent termination relief can clean your slate
Income flows pro rata based on ownership share
Calculate your daily portions with the greatest care
No special allocations like partnerships declare
Every shareholder gets their piece, completely fair
[Chorus]
S Corp election, Section thirteen-sixty-two
Pass it through, pass it through, like partnerships do
Stock basis, debt basis, keep them straight and true
AAA, PTI, E and P in order due
S Corp election, make your choice today
Save on taxes, let the profits flow your way
[Bridge]
Built-in gains tax, thirteen-seventy-four
If you converted from C Corp, there might be more
Five years recognition, then you're through the door
Passive income tax can hit at twenty-five percent or more
[Verse 3]
When distributions come your way, here's how they fall
AAA first, that's Accumulated Adjustments, y'all
Then Previously Taxed Income, standing ten feet tall
E and P comes last of all, before the capital call
Stock basis goes up and down with income and loss
Debt basis helps with deductions, but there's still a cost
S Corp versus partnership, each one has a boss
Choose the structure that fits best, whatever comes across
[Chorus]
S Corp election, Section thirteen-sixty-two
Pass it through, pass it through, like partnerships do
Stock basis, debt basis, keep them straight and true
AAA, PTI, E and P in order due
S Corp election, make your choice today
Save on taxes, let the profits flow your way
[Outro]
From C Corp to S Corp, or back again
Know the rules and timing, be the smartest when
S Corporation status helps you win
Pass-through taxation, let the savings begin