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No S corp stock in a Roth

by on
in Small Business Tax,Small Business Tax Deduction Strategies

According to a new case decided by the 9th Circuit Court, you can’t use a Roth IRA to hold S corporation stock: The corporation must be taxed as a regular C corp.

If it had ruled the other way, the corporation’s earnings would have escaped tax altogether. Once the Roth IRA owner became eligible for qualified distributions, any payouts would have been tax-free. (Taproot Administrative Services, CA-9, 3/21/12)

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