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What is the tax on passive investment income for an S Corporation?

S corporations will be subject to income taxes at the entity level and the shareholder level on the lesser of net income or excess passive investment income assuming the following exist:

A) The S corporation has accumulated C corporation earnings and profits from the time period prior to electing S status (period of existence as C corporation).

B) Passive investment income is greater than 25% of total gross receipts.

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