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You no longer have to be up to your "S" in regulations.

By Stephen Barlas

Opinions expressed by Entrepreneur contributors are their own.

With the economy dragging, a bipartisan effort is afoot inCongress to ignite the afterburners on subchapter S corporations.Over the past decade, S corps have lost some of their allure asstates (and the IRS) have authorized creation of limited liabilitycorporations, which have the advantages of S corps without thefederal regulatory disadvantages.

So why not switch an S corp to an LLC? Because an S corp cannotbe converted to an LLC without paying taxes on appreciated gains onassets. That's why Sen. Orrin Hatch (R-UT) is sponsoring theSubchapter S Modernization Act (S. 1201). "Subschapter S, asenacted and modified over the years, contains a variety oflimitations, restrictions and pitfalls for the unwary," Hatchsays. The bill, backed by the U.S. Chamber of Commerce, would makea number of numbingly technical changes in rules on who can beshareholders, stock classification, accounting for losses and Sstatus termination.

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