As the tax filing deadline for businesses inches closer and closer, there are a number of changes to the business tax code that business owners need to be aware of when preparing their returns (if you are determined to prepare your own returns, that is!).

One of the big changes is the introduction of Form 8937, which is called the “Report of Organizational Actions Affecting Basis of Securities”. This form is an informational return that requires issuers of securities to disclose actions they take that may affect holders of their securities.

For example, if your company issues securities, and at some point during the year your company takes an action (i.e. corporate tax merger, “F” reorganization, etc.) that would affect the basis of your holders’ securities, then you are required to report that action in a Form 8937. There is, however, some debate as to what types of actions qualify, so you should consult a tax professional for specific case analysis.

The idea behind this change is to give brokers and stockholders all the information they need to manage their portfolios, and also to make sure all affected parties have up-to-date information.

However, there are two very important aspects of this new reporting rule that you need to be aware of:

1. S-Corporations

If you are an S-Corporation, you can meet the reporting requirements by simply filing a timely K-1 schedule, thus making the 8937 form irrelevant for you.

2. Posting Online

Even if you are not an S-Corporation, you can get around having to file a 8937 by simply posting the necessary information on your primary website and making it available to the public for a period of ten years.

If you want to read more about this new form, you can access the IRS’s instructions for the form here:

However, if reading documents put out by the IRS is not your cup of tea (which makes you normal), feel free to call us at Beaton Accounting and we will be happy to explain the new form and its requirements to you.

Of course, if you are not inclined to file your own returns (as most business owners are these days), we have the experience and expertise to handle this for you for an affordable rate.