Reversal In Tax Court Sub S Decision
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SUB S Newsflash - Seventh Circuit Court Reverses Tax Court Decision
The Seventh Circuit Court of Appeals issued its opinion in the TEFRA disallowance appeal, ruling in favor of the Sub S Bank community. In reversing the lower Tax Court’s previous decision, the Court held that the 20% TEFRA Disallowance only applies to S corporations and their wholly-owned subsidiary QSubs for the first three taxable years after they elect S corporation status.
This is a tremendous victory for the Subchapter S bank community on a critically important issue that has been ongoing since late 2005.
The Subchapter S Bank Association would like to thank all of its members and associate members, as well as the Community Bankers Associations of Iowa, Illinois and Wisconsin, the Council of Community Banking Associations, The Independent Community Bankers of America, the Independent Bankers Association of Texas and the Wisconsin Bankers Association for supporting the Sub S TEFRA Defense Fund. In addition, we are also deeply grateful to Debra Koenig with the law firm of Godfrey Kahn, S.C., who successfully argued the appeal before the Seventh Circuit.
We will continue to provide additional information about the Court’s decision in the coming days. In the meantime, to view the Court’s opinion in full, please click here.