Now Is the Time: Converting a C Corporation to an S Corporation or LLC

For closely held corporations that still have C status, the current uncertain economic environment, depressed asset values (especially in certain real estate markets), and historically low income tax rates on distributions to individuals (qualified dividends) from C corporations (which are scheduled to expire at the end of 2012) may present an opportunity to exit C status and its attendant double taxation at an acceptable current tax cost. Tax advisers should be talking to their C corporation clients about the opportunities that now exist to avoid substantial future taxes.