H.R. 9840, S Corporation Tax Relief Package. Quorum's AI analysis reads it as a net cost — and names who bears it.

What it does

This bill modernizes S corporation tax rules by allowing stepped-up basis deductions for heirs when S corporation shareholders die, raising the passive income threshold from 25% to 60%, permitting nonresident aliens and IRAs to own S corporation stock, allowing employees to count as a single shareholder, and repealing Section 409A (nonqualified deferred compensation taxation). It also increases the shareholder limit from 100 to 250 and creates a withholding tax on nonresident alien shareholders' effectively connected income.

The analysis names S corporation owners and shareholders — and 5 more groups — among the beneficiaries.

The cost

The stepped-up basis deduction (Section 2) allows heirs to inherit S corporation stock with a basis reset to fair market value at death, eliminating capital gains tax on appreciation during the decedent's lifetime—a permanent wealth transfer benefit for high-net-worth families.

Transparency scores 35%. The analysis flags 1 rider and a high warning level.

Who is behind it

Filed by Mike Carey.