# SCorporationReturns,1997 > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/agency%3Airs%3A538c9a2765a8b124 ## Record - **Collection:** Agency decision - **Document type:** Agency decision ## Text SCorporationReturns,1997 by Susan Wittman ver the past 10 years, filings of S corporation returns have increased at an average annual rate of 10.7 percent. This growth has been spurred by four legislative acts: the Tax Reform Act of 1986, the Revenue Reconciliation Act of 1990, the Revenue Reconciliation Act of 1993, and the Small Business Job Protection Act of 1996 [1]. A total of 2.5 million S corporation returns were filed for Tax Year 1997, an increase of 6.4 percent over Tax Year 1996. S corporations are now the single most popular corporate entity choice representing 52.1 percent of all corporate entities. While S corporations have experienced continued growth, taxable corporations have experienced decreases in the number of returns filed. For Tax Year 1997, there was a decline of 3.0 percent, and over the past 10 years, taxable corporations have experienced average annual declines of 1.2 percent. The term “taxable corporations,” used herein, refers to all corporations other than S corporations [2]. Total net income (less deficit) of S corporations increased by 22.2 percent to $153.1 billion for Tax Year 1997. At the same time, S corporations remained concentrated in three industrial divisions: services; wholesale and retail trade; and manufacturing, as these three divisions account for 70.8 percent of total net income (less deficit). Nearly 71 percent of the 321,000 new S corporations were newly incorporated businesses electing S corporation status, while the remaining 93,000 new S corporations were previously incorporated and electing treatment under subchapter S for the first time. This compares with Tax Year 1996 when just over 76,000 out of 268,000 new S corporations were converted from taxable corporations. O 42 TheSmallBusinessJobProtectionActof1996 Tax legislation passed by Congress and signed into law by President Clinton in August 1996 included significant reform for S corporations. The Small Business Job Protection Act of 1996 (herein referred to as the 1996 Act) contained several major provisions relating to S corporations [3]. Some major provisions of the 1996 Act were: 42 Susan Wittman is an economist with the Corporation Special Projects Section. This article was prepared under the direction of Doug Shearer, Chief. Ø allow S corporations to have a maximum of 75 shareholders, up from 35, for tax years beginning after December 31, 1996; Ø permit certain small business trusts to hold stock in a subchapter S corporation for tax years beginning after December 31, 1996; Ø enable certain tax-exempt organizations to hold shares of S corporations for tax years beginning after December 31, 1997; Ø permit financial institutions that use the specific chargeoff method of section 166 to account for the writeoff of bad debts to elect Subchapter S status for tax years beginning after December 31, 1996; Ø allow S corporations to own 100 percent of the stock of a C or S corporation for tax years beginning after December 31, 1996. These provisions collectively make an S election a more attractive choice for small businesses, similar to the limited liability company (LLC) [4]. The limited liability company is the fastest growing type of business entity combining the partnership taxation rules with limited personal liability for all owners (members) of the organization. Limited liability companies have advantages over S corporations, including no limit to the number of owners and allowance for corporate or foreign ownership. SCorporationBasics An S corporation is a corporation that retains the main attributes of the traditional C corporation, such as limited liability, freely transferable ownership, and unlimited life span, but in exchange for certain limitations, receives the benefits of a flow-through entity for income tax purposes. Electing S corporation status allows income and expenses to pass through the corporate structure to its shareholders, and any resulting tax liability is the responsibility of the shareholders. This benefit eliminates double taxation on the corporation’s net income or capital gains. A taxable C corporation incurs a tax liability at the corporate level on its net income and capital gains. When profits are distributed to shareholders in the form of dividends, a second tax liability is incurred on those dividends. The elimination of double taxation can result in substantial tax savings for eligible corporations. Corporations that reported net losses S Corporation Returns, 1997 still benefit from an S election as the losses flow through to the individual shareholders and can potentially offset net income from other sources. To elect treatment under Subchapter S, an eligible corporation must meet all criteria for an election and file Form 2553, Election by a Small Business Corporation, with the IRS Service Center where the corporation files its Federal tax forms. All qualified shareholders of the corporation must consent to the election on Form 2553, and all eligibility requirements must be met prior to the election [5]. The criteria for Tax Year 1997 were that the corporation: Ø be a domestic corporation; Ø have no more than 75 shareholders (a husband and wife (and their estates) are counted as one shareholder for this requirement); Ø have only individuals, estates, certain trusts, and exempt organizations as shareholders [6]; Ø have no nonresident alien shareholders; and Ø have only one class of stock. Ineligible corporations were: Ø banks or thrift institutions that use the reserve method of accounting for bad debts under Internal Revenue Code section 585; Ø insurance companies subject to provisions of Subchapter L of the Internal Revenue Code; Ø corporations eligible to elect the possessions tax credit; Ø Interest-Charge Domestic International Sales Corporations (IC-DISC) or former Domestic International Sales Corporations (DISC); and Ø affiliated group members eligible for inclusion on a consolidated return. Subsidiaries Provisions of the 1996 Act allowed S corporations, for the first time, to own 80 percent or more of the stock of a C corporation. The 1996 Act allows C corporation subsidiaries to file a consolidated return with other affiliated C corporations, but the S corporation parent may not join in the affiliated filing. The 1996 Act also has a provision on the treatment of dividends for an S parent that owns at least 80 percent of a C subsidiary. The S parent cannot treat dividends received as passive income to the extent that the dividends are attributable to the earnings and profits of the C subsidiary’s active trade or business. Provisions of the 1996 Act also permit an S corporation to own 100 percent of the stock of an eligible S corporation. The parent S corporation can elect to treat the S subsidiary as a “qualified subchapter S subsidiary” or QSUB. If this election is made and the S subsidiary meets and retains all criteria for a valid S election, then all items of income or loss, credit or deduction, and all of the assets and liabilities of the S subsidiary are treated as those of the parent S corporation. The QSUB is not considered to be a separate entity for tax purposes. If the subsidiary fails to qualify as an S corporation or the S parent revokes the election, the subsidiary cannot make an S election for 5 years without the consent of the Secretary of the Treasury [8]. Additionally, the parent cannot re-elect to treat the subsidiary as a QSUB for 5 years. The provisions for ownership of subsidiaries, C or S, were effective for tax years beginning after December 31, 1996. S corporation data for Tax Year 1997 report that approximately 1,900 S corporations made QSUB elections for eligible subsidiaries owned. Many of these S corporations made the election for multiple subsidiaries owned. Figure A shows the number of S corporations reporting a QSUB election by industrial division. Banks Form 1120S, U.S. Tax Return for an S Corporation, must be filed before the 15th day of the 3rd month following the close of the tax year. The tax year for an S corporation generally must be a calendar year. While provisions exist for an exemption from the calendar year rule, for Tax Year 1997 about 88.0 percent of all S corporations filed a calendar year return [7]. The 1996 Act for the first time permitted certain financial institutions to elect treatment as an S corporation. The 104th Congress believed that if a corporation meets all of the criteria for an S election, the type of trade or business should not prohibit the election as long as special corporate tax benefits do not flow through to individual shareholders. A bank that adheres to the specific chargeoff method of IRC 43 S Corporation Returns, 1997 FigureA a trade or business,” real estate rental net income (less deficit), net income (less deficit) from other rental activity, and portfolio income (less loss) distributed to shareholders (Table 1). Total net income (less deficit) increased by 22.2 Number of Industrial division percent to $153.1 million for Tax Year 1997 (Figure returns C). Net income (less deficit) from a trade or business comprised 73.0 percent of the total net income All industries........................................................................................ 1,901 Agriculture, forestry, and fishing........................................................................................................... *537 (less deficit) for the same period. As in prior years, Mining........................................................................................................... *20 three industrial divisions comprised the vast majority Construction........................................................................................................... 66 of total net income (less deficit): wholesale and retail Manufacturing........................................................................................................... 318 trade (25.1 percent), services (23.3 percent), and Transportation and public utilities........................................................................................................... 174 manufacturing (22.4 percent). Portfolio income (less Wholesale trade........................................................................................................... 78 deficit) grew by 28.6 percent to $36.8 billion, led by Retail trade........................................................................................................... 78 Finance, insurance, and real estate........................................................................................................... 528 an increase in net long-term capital gain (less loss), Services........................................................................................................... 103 which accounted for 86.9 percent of the growth in *Estimate should be used with caution because of the small number of returns portfolio income (less deficit). The increase in the on which it is based. net long-term capital gain (less loss) can be attributed NOTE: Detail may not add to totals because of rounding. to the passage of the Taxpayer Relief Act of 1997, which was signed into law in August 1997. This section 166 to write off bad debts is permitted to legislation contained provisions that reduced the tax elect subchapter S status under the 1996 Act. As a rates on long-term capital gains for all income tax result of the legislation, which was effective for tax brackets and was effective for certain capital gains years beginning after December 31, 1996, some 639 realized after May 6, 1997. Shareholders of S corpobanks or bank holding companies elected treatment rations benefit from the reduced tax rates when gains as an S corporation in 1997 [9]. These S corporaare realized and then flow through to the shareholder. tions had an average number of 9.4 shareholders S corporations reported net long-term capital gain (compared to an average of 1.9 shareholders for all S (less loss) totaling $23.5 billion for Tax Year 1997, an corporations). Their average total assets were $75.0 increase of 43.4 percent over the prior year. million, and the average net income (less deficit) from The finance, insurance, and real estate division a trade or business was $1.3 million for this group for reported $10.0 billion of the $36.8 billion in portfolio the same period. There were also 19 savings and income (less deficit) and $2.8 billion of the $3.9 billion loan institutions that elected subchapter S status for in real estate rental net income (less deficit). This the first time. These savings and loan institutions had division is unique in that more income is derived from an average number of shareholders of 10.4, average portfolio income (less deficit) than from trade or total assets of $434.9 million, and average net income business activities (Figure D). This division ac(less deficit) from a trade or business of $9.2 million. counted for 13.3 percent of the total net income (less S corporations that were not classified as banks, bank deficit) with $20.4 billion and also accounted for 15.6 holding companies, or savings and loan institutions percent of the total returns filed. were on average much smaller, with average total Table 2 shows S corporations that reported assets of $510.2 thousand and average net income positive total net income for Tax Year 1997. S (less deficit) from a trade or business of $45.2 corporations reporting positive total net income acthousand. counted for 63.4 percent of all returns filed. This represents an increase of 9.0 percent over the prior SCorporationFinancialDataforTaxYear1997 year when over 1.4 million S corporations reported Figure B displays total net income (less deficit) for positive total net income. each industrial division. Total net income (less Total assets increased by 18.8 percent to $1.3 deficit) is a comprehensive measure of S corporation trillion, with four industries holding the majority (82.3 profits that aggregates net income (less deficit) “from S Corporations with a Qualified Subchapter S Subsidiary Election by Industrial Division, Tax Year 1997 44 44 S Corporation Returns, 1997 FigureB S Corporations: Total Net Income (Less Deficit), by Industrial Division, Tax Year 1997 [Money amounts are in thousands of dollars] Agriculture, Item All industries ¹ forestry, and Mining Construction Manufacturing (3) (4) (5) fishing (1) (2) Total net income (less deficit)............................................................................... 153,063,011 2,834,344 14,493,088 34,344,858 Net income (less deficit) from a trade or business............................................................................................................... 111,722,678 1,081,658 1,886,453 2,450,167 12,931,027 27,970,457 Portfolio income............................................................................................................... 36,798,082 1,252,687 920,961 1,457,712 6,162,120 Dividend income..................................................................................................... 1,499,026 27,803 51,199 114,899 194,762 Interest income..................................................................................................... 9,597,533 244,741 196,038 848,100 1,414,101 Royalty income (less loss)..................................................................................................... 859,503 24,831 133,928 *8,340 122,312 Net short-term capital gain (less loss)..................................................................................................... 1,140,527 16,391 81,985 31,081 139,550 Net long-term capital gain (less loss)..................................................................................................... 23,495,736 935,730 455,961 450,496 4,279,499 Other portfolio income (net)..................................................................................................... 205,757 *3,192 1,850 4,795 11,897 10,164 94,406 162,592 Net income (less deficit) from other rental activity............................................................................................................... 688,929 24,064 16,766 9,943 49,689 Real estate rental net income (less deficit)............................................................................................................... 3,853,322 91,758 Item Transportation Wholesale Finance, and public and retail insurance, utilities trade and real estate (6) Services (7) (8) (9) 38,345,586 20,420,790 35,729,256 Net income (less deficit) from a trade or business....................................................................................................................... 2,914,066 28,895,377 7,590,045 28,441,549 Portfolio income....................................................................................................................... 1,360,635 8,914,747 9,997,872 6,721,405 Total net income (less deficit)....................................................................................... 4,422,930 Dividend income.................................................................................................................... 46,046 251,401 605,393 207,522 Interest income.................................................................................................................... 461,278 1,961,745 2,775,658 1,693,544 Royalty income (less loss).................................................................................................................... *1,772 348,935 139,718 79,667 Net short-term capital gain (less loss).................................................................................................................... 18,057 100,190 808,048 -54,776 Net long-term capital gain (less loss).................................................................................................................... 826,766 6,453,475 5,641,962 4,444,232 Other portfolio income (net).................................................................................................................... 6,714 8,218 87,144 81,947 308,506 2,797,388 302,276 Net income (less deficit) from other rental activity............................................................................................................... 61,998 226,958 35,484 264,026 Real estate rental net income (less deficit)............................................................................................................... 86,232 *Estimate should be used with caution because of the small number of sample returns on which it is based. ¹ Includes nature of business not allocable, not shown separately. NOTE: Detail may not add to totals because of rounding. percent) of the assets (Figure E). Wholesale and retail trade reported $371.1 billion in total assets followed by finance, insurance, and real estate reporting $292.6 billion, manufacturers reporting $227.7 billion, and services reporting $184.4 billion (Table 3). The largest asset item reported by all S corporations, depreciable assets, accounted for 24.4 percent of total assets, while the largest liability item, “mortgages, notes, and accounts payable in more than one year,” accounted for 20.9 percent of total liabilities. These statistics for Tax Year 1997 are consistent with data from the prior year. RentalRealEstateNetIncome Table 4 shows data for rental real estate net income as reported by S corporations on Form 8825, Rental Real Estate Income and Expenses of a Partnership or an S Corporation. Net Rental Real Estate Income (less deficit) increased by 34.3 percent to $3.9 billion for Tax Year 1997. The real estate group, within the finance, insurance, and real estate division, earns the vast majority of this type of income (71.4 percent). Also reported on Form 8825 and included in the net rental real estate income (less deficit) is the net gain (loss) from the disposition of property from rental real estate activities. This item reported a 261.2-percent increase to $88.1 million for Tax Year 1997. Net income (loss) from rental real estate activities from estates or trusts in which the S corporation is a beneficiary increased by 206.1 percent to $512.0 million. This item is also included in net rental real estate income (less deficit). 45 S Corporation Returns, 1997 FigureC S Corporations: Income Items for Selected Industrial Divisions, Tax Years 1996 and 1997 [Money amounts are in thousands of dollars] Percentage Industrial division, item 1996 1997 change, 1996 to 1997 (1) (2) (3) All industries ¹ Number of returns… … … … ........................................................................................................ 2,304,416 Net income (less deficit) from a trade or business...................................................................................................... 93,138,842 2,452,254 6.4 111,722,678 20.0 16.7 Net income… … … ..................................................................................................................... 132,544,004 154,704,647 Deficit… … … … … .… ..................................................................................................................... 39,405,161 42,981,970 9.1 Total net income (less deficit)...................................................................................................... 125,245,496 153,063,011 22.2 Net income… … … ...................................................................................................................... 161,896,380 192,122,074 18.7 Deficit… … … … … ..… ..................................................................................................................... 36,650,884 39,059,063 6.6 Manufacturing Number of returns… … … … ........................................................................................................ 141,171 Net income (less deficit) from a trade or business...................................................................................................... 23,778,603 153,249 8.6 27,970,457 17.6 16.3 Net income… … … ..................................................................................................................... 28,863,877 33,561,802 Deficit… … … … .… … ..................................................................................................................... 5,085,274 5,591,345 10.0 Total net income (less deficit)...................................................................................................... 28,733,161 34,344,858 19.5 Net income… … … ...................................................................................................................... 33,400,086 39,303,105 17.7 Deficit… … … … .… … ..................................................................................................................... 4,666,926 4,958,247 6.2 Wholesale and retail trade Number of returns… … … … ........................................................................................................ 556,908 Net income (less deficit) from a trade or business...................................................................................................... 23,439,466 46 583,006 4.7 28,895,377 23.3 16.4 Net income… … … ..................................................................................................................... 33,187,443 38,618,119 Deficit… … … … ...… … ..................................................................................................................... 9,747,977 9,722,742 -0.3 Total net income (less deficit)...................................................................................................... 29,972,943 38,345,586 27.9 Net income… … … ...................................................................................................................... 39,008,036 47,154,079 20.9 Deficit… … … … ..… … ..................................................................................................................... 9,035,094 8,808,493 -2.5 Finance, insurance, and real estate Number of returns… … … … ........................................................................................................ 356,778 Net income (less deficit) from a trade or business...................................................................................................... 6,567,588 382,153 7.1 7,590,045 15.6 17.2 Net income… … … ..................................................................................................................... 12,580,546 14,748,463 Deficit… … … … … ...… ..................................................................................................................... 6,012,958 7,158,418 19.0 Total net income (less deficit)...................................................................................................... 15,088,860 20,420,790 35.3 Net income… … … ...................................................................................................................... 20,974,039 26,888,171 28.2 Deficit… … … … ...… … ..................................................................................................................... 5,885,179 6,467,381 9.9 Services Number of returns… … … … ........................................................................................................ 815,494 860,445 5.5 28,441,549 18.9 33,973,434 39,791,342 17.1 Deficit… … … … … … … ..… ..................................................................................................................... 10,054,350 11,349,794 12.9 Net income (less deficit) from a trade or business...................................................................................................... 23,919,085 Net income… … … ..................................................................................................................... Total net income (less deficit)...................................................................................................... 31,113,590 35,729,256 14.8 Net income… … … ...................................................................................................................... 40,313,108 46,255,320 14.7 Deficit… … … … … … ..… ..................................................................................................................... 9,199,517 10,526,064 14.4 ¹ Includes agriculture, forestry, and fishing; mining; construction; transportation and public utilities; and nature of business not allocable. NOTE: Detail may not add to totals because of rounding. 46 S Corporation Returns, 1997 FigureD S Corporation Total Net Income (Less Deficit), by Industrial Division, Tax Year 1997 Billions of dollars 45 40 35 30 25 20 15 10 5 0 Agriculture, forestry, and fishing Mining Construction Manufacturing Transportation Wholesale and Finance, and public retail trade insurance, and utilities real estate Services Industrial division Net income (less deficit) from a trade or business Portfolio income Real estate rental net income (less deficit) Net income (less deficit) from other rental activity Partnerships also report net rental real estate income (less deficit) on Form 8825 similar to S corporations. Partnerships reported 716,000 returns with a Form 8825 and net rental real estate (less deficit) totaling $17.3 billion for Tax Year 1997 [10]. Much like S corporations, the vast majority of returns and income come from real estate. DatabyNumberofShareholders The 1996 Act made an S election a more attractive choice as it lessened some restrictions on businesses wanting the benefits of corporate structure and the benefits of flow-through status that S election can provide. One of the provisions of the 1996 Act increased the maximum number of allowable shareholders from 35 to 75. This has not resulted in a significant change in the number of returns with 10 or fewer shareholders; for Tax Year 1997, about 98.7 percent of all S corporation returns had 10 or fewer shareholders (Table 5). This statistic is consistent with data from prior years. Nearly all (99.3 percent) new S corporations reported 10 or fewer sharehold- 47 S Corporation Returns, 1997 FigureE S Corporation Total Assets, by Industrial Division, Tax Year 1997 Billions of dollars 400 350 300 250 200 150 100 48 50 0 Agriculture, forestry, and fishing Mining Construction Manufacturing Transportation Wholesale and Finance, and public retail trade insurance, and utilities real estate Services Industrial division 48 ers. S corporations reporting 10 or fewer shareholders also accounted for 89.0 percent of total assets and 89.0 percent of total net income. While the vast majority of S corporations continued to have 10 or fewer shareholders, there was a significant increase in the number of returns and number of shareholders for returns with more than 30 shareholders. In Tax Year 1996, less than 500 returns, or 0.02 percent of all S corporations, reported more than 30 shareholders, and there were less than 17,000 shareholders owning shares in these corporations. For Tax Year 1997, more than 1,200 returns reported having more than 30 shareholders, and the total number of share- holders exceeded 46,000. S corporations were not permitted to have more than 35 shareholders prior to the 1996 Act. For Tax Year 1997, there were 600 S corporations with more than 35 shareholders and nearly 26,000 shareholders. Thus, while the impact of the 1996 Act on the majority S corporations was small with respect to the number of shareholders, the number of returns with more than 30 shareholders more than doubled. TaxationofSCorporations Although S corporations generally do not pay income tax, less than half of 1 percent reported some Federal S Corporation Returns, 1997 income tax liability. There are four types of Federal income tax that can apply directly to S corporations. The most common tax reported by S corporations is the “built-in gains” tax. Nearly three-quarters, or $190 million, of all Federal income tax reported by S corporations for Tax Year 1997 were from the builtin gains tax, and the total amount of this tax increased by 18.3 percent over Tax Year 1996 (Figure F). The built-in gains tax does not apply to an S corporation that has had a valid S election in place since inception. S corporations that are potentially liable for this tax are those that made an S election after 1986 and realized a gain on the sale of an asset held at the time of that election within 10 years from the first day of the S corporation’s election. The gain that results in a tax liability is built in to the extent of the appreciation of the asset that occurred while under the taxable corporation rules [11]. The remaining taxes that can result in an income tax liability for an S corporation are the excess net passive income tax, the LIFO recapture tax (included in “Adjustments to tax” in Figure F), and the recapture of prior year’s investment credit. All of these apply only to corporations that had operated as C corporations before their S elections. The excess net passive income tax is imposed on S corporations that were previously C corporations and that have subchapter C earnings and profits if their passive investment income exceeds 25 percent of gross receipts [12]. The last-in, first-out, or LIFO recapture tax, applies to corporations that switched from C to S status after December 17, 1987, and that had valued their inventory assets using LIFO. Upon conversion, FigureF S Corporation Taxes, Tax Years 1996 and 1997 [Money amounts are in thousands of dollars] Items 1996 1997 Percent change, 1996 to 1997 (1) (2) (3) Total tax............................................................................................. 192,303 256,352 33.3 Built-in gains tax.................................................................................... 160,682 190,016 18.3 Excess net passive income tax.................................................................................... 10,703 16,494 54.1 Adjustments to tax.................................................................................... 19,869 46,393 133.5 Investment credit recapture tax.................................................................................... *894 *1,042 16.6 Income tax adjustment.................................................................................... *155 *2,407 1,452.9 *Estimate should be used with caution because of the small number of sample returns on which it is based. these corporations are required to include in gross income a LIFO recapture amount, which is the amount of inventory valued under the first-in, first-out (FIFO) method that exceeds the inventory valued under LIFO. Similarly, if inventory is transferred in a tax-free reorganization from a taxable C corporation to an S corporation, there must be a LIFO recapture adjustment made to gross income. Finally, an S corporation is liable for recapture attributable to credits allowed in years before the corporation was an S corporation. Figure F displays taxes reported by S corporations for Tax Years 1996 and 1997. The adjustments to tax include Section 1363(d) LIFO recapture taxes and interest due from Form 8697, Interest Computation under Look-Back Method for Completed Long-Term Contracts. The income tax adjustment includes Section 1291(c)(2) deferred tax of a shareholder in a passive foreign investment company. S corporations reported total net income of $153.1 billion and total tax liability of $256.4 million for Tax Year 1997. This tax liability was reported by fewer than 8,000 S corporations for this period, or approximately 0.3 percent of all S corporations. Summary for Tax Year 1997 S corporations continued to demonstrate steady growth as the number of returns filed increased by 6.4 percent to 2.5 million returns. S corporations are the most popular corporate entity, with 52.1 percent of all U.S. corporations electing treatment under subchapter S. The Small Business Job Protection Act of 1996 provided significant reform and eased many restrictions faced by S corporations. Provisions of the 1996 Act allowed S corporations to own 80 percent or more of the stock of a C corporation. Also for the first time, S corporations could own 100 percent of the stock of an eligible S corporation and elect to treat the S subsidiary as a “qualified subchapter S subsidiary.” Over 1,900 S corporations reported owning at least one QSUB for Tax Year 1997. The 1996 Act also allowed certain financial institutions to elect treatment as an S corporation for the first time. For Tax Year 1997, some 658 banks, bank holding companies, and savings and loan institutions elected treatment as an S corporation. Total net income (less deficit) for S corporations increased to $153.1 billion, up 22.2 percent. Net income from a trade or business comprised 73.0 49 S Corporation Returns, 1997 50 percent of total net income (less deficit) at $111.7 billion, up 20.0 percent over Tax Year 1996. Portfolio income (or loss) increased by 28.6 percent to $36.8 billion, led by increases in net long-term capital gain (less loss) of 43.4 percent to $23.5 billion and representing 63.9 percent of all portfolio income (or loss). The increase in net long-term capital gain (less loss) was spurred by the reduction in tax rates resulting from the passage of the Taxpayer Relief Act of 1997. Total assets reported by S corporations were $1.3 trillion, with four industries reporting 82.3 percent of all assets. As in past years, S corporations are concentrated in three industrial divisions when measured by the number of returns filed: services; wholesale and retail trade; and finance, insurance, and real estate. These three industries accounted for 74.5 percent of all returns filed for Tax Year 1997. Net rental real estate income (less deficit) increased by 34.3 percent to $3.9 billion for Tax Year 1997. Despite increases in the maximum number of shareholders allowed, 98.7 percent of all S corporations continued to be owned by 10 or fewer shareholders. The number of returns that reported more than 30 shareholders more than doubled yet still accounted for less than 1 percent of the total returns for Tax Year 1997. Nearly all of the newly elected S corporations reported 10 or fewer shareholders. Less than half of 1 percent of all S corporations reported Federal income tax liability, and most reported liability for the built-in gains tax. DataSourcesandLimitations 50 The statistics for Tax Year 1997 are based on a sample of S corporation income tax returns with accounting periods ending July 1997 through June 1998 that posted to the Internal Revenue Service Business Master File between July 1997 and the end of June 1999. The estimates in this article were based on a stratified probability sample of 24,780 S corporation returns drawn from a total population of 2,574,150 returns. The stratification was based on combinations of total assets and net income (less deficit) from trade or business income. Sample rates ranged from 0.25 percent to 100 percent. The sample was selected after administrative processing, but before audit examination. The selected sample included 24,281 active S corporation returns. Based on this count, the number of active S corporations for Tax Year 1997 was estimated to be 2,452,254. Because the estimates are based on a sample, they are subject to sampling error. Coefficients of variation (CV's) are used to measure the magnitude of this sampling error. The CV is defined in the section on sampling variability in the “SOI Sampling Methodology and Data Limitations” appendix of this publication. Figure G presents the coefficients of variation for S corporations for selected variables by industrial division. The smaller the coefficient of variation, the more reliable the estimate is judged to be. NotesandReferences [1] For more information on the impact of the Tax Reform Act of 1986 on S corporations, see Gill, Amy, “S Corporation Returns, 1992,” Statistics of Income Bulletin, Spring 1995, Volume 14, Number 4; Gill, Amy and Wittman, Susan, “S Corporation Election After the Tax Reform Act of 1986,” Statistics of Income Bulletin, Spring 1998, Volume 17, Number 4. For more information on the impact of the Revenue Reconciliation Act of 1993, see Wittman, Susan, “S Corporation Returns, 1994,” Statistics of Income Bulletin, Spring 1997, Volume 16, Number 4. [2] For purposes of this article, taxable corporation return types include Form 1120, Form 1120-A, Form 1120F, Form 1120L, and Form 1120-PC. Form 1120-REIT and Form 1120-RIC, while not taxable corporations, are included in the statistics along with all other corporations. [3] The 1996 Act contained 17 provisions relating to S corporations. Five of the 17 have been highlighted, other major provisions include: permit financial institutions to hold safe harbor debt; grant the IRS the authority to validate certain invalid elections; repealed TEFRA audit procedures; allow retroactive re-elections; allow adjustments to basis of inherited S corporation stock; and modified rules regarding the treatment of certain real estate held by an S corporation. [4] For more information on limited liability companies, see Zempel, Alan, “Partnership Returns, 1997,” Statistics of Income Bulletin, Fall 1999, Volume 19, Number 2. S Corporation Returns, 1997 FigureG S Corporations: Coefficients of Variation for Number of Returns, Number of Shareholders, Total Receipts, Dividends, and Interest, by Industrial Division, Tax Year 1997 Number Industrial division Number of of Total Dividend Interest returns shareholders receipts income income (1) (2) (3) (4) (5) All industries ¹....................................................................................................................... 0.26 0.90 0.68 6.30 1.53 Agriculture, forestry, and fishing....................................................................................................................... 4.68 5.86 5.13 17.44 7.02 Mining....................................................................................................................... 12.18 19.36 8.87 9.88 8.19 Construction....................................................................................................................... 1.70 2.26 1.88 7.87 3.70 Manufacturing....................................................................................................................... 3.36 4.15 1.88 8.00 3.00 Transportation and public utilities....................................................................................................................... 4.10 5.27 4.10 14.08 5.21 Wholesale and retail trade....................................................................................................................... 1.19 1.79 1.03 14.97 2.42 Finance, insurance, and real estate....................................................................................................................... 1.50 2.86 3.57 13.64 3.75 Services....................................................................................................................... 1.02 2.14 8.54 4.37 1.80 ¹ Includes nature of business not allocable, not shown separately. [5] Provisions exist to allow for late-filed election to be considered as timely-made. See Revenue Procedure 97-40 for extended filings. For further details on filing an S election, see Internal Revenue Service, Internal Revenue Code, Subchapter S [Section 1362(a), (b)]. [6] Eligible trusts are defined in the Internal Revenue Code 1361(c)(2)(A). Eligible exempt organizations are defined in Internal Revenue Code 401(a) or 501(c)(3). [7] S corporations may elect another tax year if a business purpose can be established to the satisfaction of the Internal Revenue Service, or they may use an alternate tax year but make “required payments” to the Internal Revenue Service per Code section 1378. [8] If the election is terminated, then the subsidiary will be treated as a new corporation acquiring all of its assets and liabilities immediately before the termination of the QSUB election from the parent S corporation in exchange for its stock. [9] For industry definitions used to classify Statistics of Income corporation data, see Internal Revenue Service, Statistics of Income, Corporation Source Book, Publication 1053. Banks are assigned to Statistics of Income industry code 6060, bank holding companies 6090, and savings and loan associations 6120. [10] For more information on rental real estate data reported by partnerships, see Zempel, Alan, “Partnership Returns, 1997,” Statistics of Income Bulletin, Fall 1999, Volume 19, Number 2. [11] For further detail, see Internal Revenue Service, Internal Revenue Code, Subchapter S, Section 1374. Also see Gill, Amy, “S Corporation Returns, 1992,” Statistics of Income Bulletin, Spring 1995, Volume 14, Number 4. [12] “Passive investment income” means gross receipts derived from royalties, rents, dividends, interest (excluding interest on installment sales of inventory to customers and income of certain lending and financing businesses), annuities, and sales or exchanges of stock or securities to the extent of any gains. “Excess net passive income” is the amount that bears the same ratio to net passive income as the amount of passive investment income that exceeds 25 percent of gross receipts bears to passive investment income. SOURCE: IRS, Statistics of Income Bulletin, Publication 1136, Spring 2000. 51 S Corporation Returns, 1997 Table 1.--All Returns: Total Receipts and Deductions, Portfolio Income, Rental Income, and Total Net Income, by Major Industrial Group [All figures are estimates based on samples--money amounts are in thousands of dollars] Mining Total Metal mining Coal mining Oil and gas extraction Nonmetallic minerals, except fuels (2) (3) (4) (5) (6) (7) 88,270 16,403 *1,192 823 12,202 2,186 Number of shareholders............................................ 4,656,807 214,565 Income from a trade or business: Total receipts ¹...................................................................... 2,895,237,519 51,202,714 Business receipts.......................................................... 2,840,623,943 47,744,780 Interest on Government obligations: State and local............................................................................... 943,255 37,387 Net gain, noncapital assets.......................................................... 5,894,594 388,615 Other receipts.......................................................... 47,775,727 3,031,931 39,142 *8,464 1,628 24,645 4,404 14,976,849 13,705,830 *216,868 *171,975 3,413,876 3,309,011 8,085,346 7,045,410 3,260,760 3,179,434 13,638 290,889 966,493 -*24,670 *20,223 *4,074 43,450 57,340 7,635 200,132 832,169 *1,929 22,637 56,761 Total deductions...................................................................... 2,782,571,586 50,083,669 Cost of goods sold.......................................................... 1,846,213,271 25,755,506 Compensation of officers.......................................................... 108,270,276 1,321,960 Salaries and wages.......................................................... 281,934,980 4,348,044 Repairs.......................................................... 18,504,868 1,198,038 Bad debts.......................................................... 5,978,012 73,078 Rent paid on business property.......................................................... 58,176,400 1,816,235 Taxes paid..........................................................59,433,721 1,054,782 Interest paid.......................................................... 33,534,784 1,210,241 Amortization..........................................................3,569,790 31,729 Depreciation.......................................................... 48,746,061 2,198,432 Depletion.......................................................... 350,952 *26,835 Advertising..........................................................27,680,184 205,788 Pension, profit-sharing, stock bonus, and annuity plans...................................................... 10,059,851 76,317 Employee benefit programs.......................................................... 19,856,378 264,681 Net loss, noncapital assets.......................................................... 587,800 7,498 Other deductions.......................................................... 259,674,259 10,494,503 13,076,759 6,585,430 316,202 1,088,439 343,891 21,924 300,850 533,760 326,849 32,278 692,282 135,931 21,814 *200,689 *72,255 *5,450 *6,923 *18,559 *( ² ) *8,063 *11,236 *3,799 *554 *10,014 *4,411 *155 3,335,965 1,864,414 15,789 180,375 90,076 *4,101 98,662 147,035 55,413 3,439 147,328 53,040 1,125 6,591,313 2,667,326 204,882 778,875 191,814 13,108 171,556 279,394 210,931 12,634 317,050 23,645 11,697 2,948,792 1,981,434 90,081 122,265 43,442 4,715 22,570 96,095 56,707 15,651 217,890 54,835 8,838 59,758 211,444 2,385 2,403,522 *2,728 *1,667 -*54,875 10,394 151,792 68 512,914 24,791 35,836 *1,329 1,646,444 21,845 22,149 *988 189,288 Total receipts less total deductions ¹........................................................... 112,665,933 1,119,045 1,900,090 *16,179 77,911 1,494,033 311,967 1,886,453 2,417,696 531,243 *16,179 *36,644 *20,465 73,836 158,307 84,470 1,486,399 1,834,837 348,438 310,039 387,908 77,869 920,961 51,199 196,038 133,928 *3,624 -*3,624 -- 93,766 6,876 28,339 *2,861 769,494 39,555 138,322 131,067 54,077 4,767 25,753 -- 81,985 -- *7,978 69,139 *4,868 455,961 1,850 --- 47,257 *454 391,114 *297 17,590 *1,099 Item All industries (1) Number of returns....................................................................... 2,452,254 52 Net income (less deficit) from a trade or business......................................................... 111,722,678 Net income.......................................................................... 154,704,647 Deficit.......................................................................... 42,981,970 Agriculture, forestry, and fishing 1,081,658 3,219,819 2,138,161 Portfolio income (less deficit) distributed to shareholders......................................................... 36,798,082 1,252,687 Dividend income.......................................................................... 1,499,026 27,803 Interest income.......................................................................... 9,597,533 244,741 Royalty income (less loss).......................................................................... 859,503 24,831 Net short-term capital gain (less loss)....................................................... 1,140,527 16,391 Net long-term capital gain (less loss)....................................................... 23,495,736 935,730 Other portfolio income (net).......................................................................... 205,757 *3,192 52 Real estate rental net income (less deficit)......................................................... 3,853,322 Net income.......................................................................... 5,713,349 Deficit.......................................................................... 1,860,027 91,758 104,261 12,503 10,164 18,431 8,266 *48 *48 -- *1,616 *1,627 11 3,992 11,860 *7,868 4,508 4,896 *388 Net income (less deficit) from other rental activity......................................................... 688,929 Net income.......................................................................... 1,065,842 Deficit..........................................................................376,913 24,064 26,541 *2,477 16,766 18,087 *1,321 *172 *172 -- *1,095 *1,095 -- 2,943 4,264 *1,321 *12,557 *12,557 -- Total net income (less deficit)....................................................................... 153,063,011 2,450,167 Net income.......................................................................... 192,122,074 4,371,253 Deficit.......................................................................... 39,059,063 1,921,086 2,834,344 3,219,960 385,616 *20,022 *40,196 *20,174 170,314 236,272 *65,958 2,262,827 2,489,114 226,287 381,181 454,378 *73,197 Footnotes at end of table. S Corporation Returns, 1997 Table 1.--All Returns: Total Receipts and Deductions, Portfolio Income, Rental Income, and Total Net Income, by Major Industrial Group--Continued [All figures are estimates based on samples--money amounts are in thousands of dollars] Construction Item Total (8) General building contractors and operative builders Heavy construction contractors Total Food and kindred products Tobacco manufactures Textile mill products (13) (14) (15) (11) (12) 9,242 150,239 153,249 9,507 3 2,471 Number of shareholders............................................ 414,392 160,376 Income from a trade or business: Total receipts ¹...................................................................... 332,647,323 152,422,824 Business receipts.......................................................... 329,955,853 151,425,313 Interest on Government obligations: State and local............................................................................... 56,981 31,478 Net gain, noncapital assets.......................................................... 320,115 59,877 Other receipts.......................................................... 2,314,375 906,156 16,705 237,310 363,440 38,906 12 5,830 37,269,942 36,490,937 142,954,557 142,039,602 488,763,265 483,403,850 65,072,155 64,513,489 371,132 351,191 17,524,273 17,280,657 12,264 133,970 632,770 13,239 126,267 775,449 144,681 898,648 4,316,087 9,657 77,823 471,186 -12,100 7,840 5,455 31,107 207,055 Total deductions...................................................................... 319,659,315 148,211,625 Cost of goods sold.......................................................... 250,380,576 127,827,999 Compensation of officers.......................................................... 11,018,667 3,507,915 Salaries and wages.......................................................... 16,190,890 4,629,061 Repairs.......................................................... 1,482,362 327,310 Bad debts.......................................................... 420,388 89,262 Rent paid on business property.......................................................... 2,757,552 639,203 Taxes paid.......................................................... 6,100,848 1,614,464 Interest paid.......................................................... 2,185,762 931,324 Amortization.......................................................... 57,580 21,684 Depreciation.......................................................... 4,895,481 930,345 Depletion.......................................................... 12,232 *189 Advertising.......................................................... 911,762 364,277 Pension, profit-sharing, stock bonus, and annuity plans...................................................... 1,077,238 277,381 Employee benefit programs.......................................................... 2,598,165 560,783 Net loss, noncapital assets.......................................................... 37,379 6,393 Other deductions.......................................................... 19,532,434 6,484,033 35,727,969 27,881,498 863,872 1,645,694 261,517 31,117 270,151 631,468 279,456 2,882 1,379,665 12,043 33,217 135,719,721 94,671,079 6,646,879 9,916,135 893,535 300,010 1,848,198 3,854,916 974,981 33,013 2,585,471 -514,268 460,648,128 333,190,846 15,209,291 34,390,126 2,291,760 1,115,124 4,888,213 9,919,707 5,467,421 537,352 11,331,145 154,373 4,414,546 62,271,717 48,298,504 907,538 3,699,747 316,884 79,130 437,754 936,225 589,728 63,808 1,294,076 -1,197,797 309,895 206,652 4,959 12,652 763 20 1,555 45,999 4,060 14,687 3,495 -3,026 16,766,781 13,269,121 384,837 818,525 77,342 52,106 112,800 318,652 228,242 7,511 393,721 -43,467 152,694 297,995 *14,695 1,970,004 647,163 1,739,386 16,290 11,078,397 2,135,671 4,943,221 76,435 30,582,897 202,078 532,555 4,651 3,711,243 251 1,730 2 10,043 44,991 174,781 *2,025 838,661 Total receipts less total deductions ¹........................................................... 12,988,008 4,211,199 1,541,973 7,234,836 28,115,138 2,800,437 61,237 757,493 1,529,709 1,973,085 443,375 7,221,597 8,492,503 1,270,906 27,970,457 33,561,802 5,591,345 2,790,780 3,232,866 442,086 61,237 61,237 -- 752,038 937,635 185,597 336,373 34,975 157,506 *8,337 484,774 35,485 253,936 *3 6,162,120 194,762 1,414,101 122,312 214,696 10,882 161,962 *7,082 211,372 220 1,308 -- 220,628 4,314 45,660 -- 5,935 14,524 139,550 -782 -- *3,692 126,308 *3,311 180,696 *130 4,279,499 11,897 34,993 *560 209,843 -- 166,962 1 Net income (less deficit) from a trade or business......................................................... 12,931,027 Net income.......................................................................... 16,085,416 Deficit.......................................................................... 3,154,388 4,179,721 5,619,828 1,440,107 Portfolio income (less deficit) distributed to shareholders......................................................... 1,457,712 636,564 Dividend income.......................................................................... 114,899 44,439 Interest income.......................................................................... 848,100 436,657 Royalty income (less loss).......................................................................... *8,340 -Net short-term capital gain (less loss)....................................................... 31,081 10,622 Net long-term capital gain (less loss)....................................................... 450,496 143,491 Other portfolio income (net).......................................................................... 4,795 *1,354 (10) Special trade contractors 101,623 Number of returns....................................................................... 261,104 (9) Manufacturing Real estate rental net income (less deficit)......................................................... 94,406 Net income.......................................................................... 120,624 Deficit.......................................................................... 26,218 77,659 98,970 21,311 11,003 11,160 *157 5,743 10,494 4,751 162,592 181,828 19,236 6,106 7,999 1,894 8 8 -- 4,261 4,425 *164 Net income (less deficit) from other rental activity......................................................... 9,943 Net income.......................................................................... 14,870 Deficit..........................................................................*4,927 6,157 7,949 *1,792 1,760 2,322 562 2,026 *4,599 *2,572 49,689 52,214 2,525 3,384 *3,939 *556 ---- *1,387 *1,463 76 Total net income (less deficit)....................................................................... 14,493,088 4,900,101 Net income.......................................................................... 17,347,415 6,190,918 Deficit.......................................................................... 2,854,327 1,290,817 1,878,845 2,225,751 346,906 7,714,142 8,930,745 1,216,604 34,344,858 39,303,105 4,958,247 3,014,966 3,431,525 416,560 272,617 272,617 -- 978,313 1,151,819 173,506 Footnotes at end of table. 53 S Corporation Returns, 1997 Table 1.--All Returns: Total Receipts and Deductions, Portfolio Income, Rental Income, and Total Net Income, by Major Industrial Group--Continued [All figures are estimates based on samples--money amounts are in thousands of dollars] Manufacturing--continued Item Apparel and other textile products Lumber and wood products Furniture and fixtures Paper and allied products Printing and publishing Chemical and allied products Petroleum (including integrated) and coal products Rubber and miscellaneous plastics products (16) (17) (18) (19) (20) (21) (22) (23) Number of returns....................................................................... 7,838 54 11,397 4,584 1,752 29,312 5,677 241 6,046 Number of shareholders............................................ 16,290 25,000 Income from a trade or business: Total receipts ¹...................................................................... 27,962,058 27,608,834 Business receipts.......................................................... 27,599,863 27,340,940 Interest on Government obligations: State and local............................................................................... 2,994 3,074 Net gain, noncapital assets.......................................................... 9,280 35,479 Other receipts.......................................................... 349,921 229,341 10,969 6,025 60,788 13,597 395 15,375 12,521,683 12,396,214 19,438,958 19,262,101 41,183,068 40,120,106 20,369,712 20,233,150 2,513,564 2,478,831 30,202,085 29,997,778 4,702 25,330 95,437 8,738 44,926 123,194 20,425 117,965 924,573 6,044 5,133 125,386 *42 *597 34,094 13,731 51,636 138,941 11,881,920 8,607,972 328,461 870,361 49,017 55,198 143,117 275,314 126,864 4,466 222,333 -159,713 18,462,005 14,022,751 479,460 1,222,681 111,437 58,320 166,183 355,554 217,055 19,993 524,369 *402 52,854 39,077,360 21,158,969 2,306,193 5,286,306 271,984 207,345 767,731 1,127,098 572,177 149,097 1,226,467 *583 516,186 19,166,589 12,883,963 664,732 1,678,086 105,981 57,302 235,831 367,660 242,366 46,021 493,692 -247,796 2,458,922 1,959,184 37,436 114,795 26,109 *6,271 15,795 36,433 21,283 *2,715 45,607 *346 6,332 28,436,954 20,811,479 1,001,717 1,752,141 122,263 43,027 210,987 628,346 392,118 23,832 1,038,813 -217,780 57,302 159,246 *2,854 819,701 96,937 186,229 *1,805 945,975 248,370 487,990 6,742 4,744,119 87,732 206,193 *1,570 1,847,667 *5,619 *12,733 48 168,216 130,757 341,215 1,209 1,721,269 639,762 976,954 2,105,708 1,203,123 54,641 1,765,131 635,060 779,004 143,943 968,216 1,185,093 216,877 2,085,283 2,888,919 803,636 1,197,079 1,455,829 258,750 54,599 85,962 *31,363 1,751,400 2,071,865 320,465 321,155 925 28,796 *7 114,914 4,929 61,229 30 1,419,259 33,050 157,170 *5,629 485,705 18,320 67,441 *3,100 7,332 *9 7,446 -- 153,591 8,900 81,360 *4,524 *-671 *2,500 3,594 2,665 *93 -12,565 291,522 575 46,094 132 1,213,662 *6,155 393,939 *240 *-217 -- 71,372 (²) Total deductions...................................................................... 27,267,929 26,381,191 Cost of goods sold.......................................................... 19,934,328 20,289,992 Compensation of officers.......................................................... 929,331 616,781 Salaries and wages.......................................................... 2,333,477 1,363,435 Repairs.......................................................... 55,414 228,429 Bad debts.......................................................... 69,241 46,514 Rent paid on business property.......................................................... 382,608 172,339 Taxes paid.......................................................... 655,978 543,140 Interest paid..........................................................414,192 348,509 Amortization.......................................................... 11,157 16,131 Depreciation..........................................................316,177 688,064 Depletion.......................................................... -*137,301 Advertising.......................................................... 257,657 105,654 Pension, profit-sharing, stock bonus, and annuity plans...................................................... 76,265 87,170 Employee benefit programs.......................................................... 178,527 198,490 Net loss, noncapital assets.......................................................... 4,756 19,970 Other deductions.......................................................... 1,648,820 1,519,273 Total receipts less total deductions ¹........................................................... 694,129 1,227,644 Net income (less deficit) from a trade or business......................................................... 691,135 Net income.......................................................................... 1,271,306 Deficit.......................................................................... 580,171 1,224,569 1,587,270 362,701 Portfolio income (less deficit) distributed to shareholders......................................................... 67,939 316,000 Dividend income.......................................................................... 12,965 3,586 Interest income.......................................................................... 47,121 70,436 Royalty income (less loss).......................................................................... 7,441 *178 Net short-term capital gain (less loss)....................................................... *225 1,915 Net long-term capital gain (less loss)....................................................... -122 236,900 Other portfolio income (net).......................................................................... *309 *2,986 54 Real estate rental net income (less deficit)......................................................... 10,591 Net income.......................................................................... 12,541 Deficit..........................................................................*1,950 16,620 20,019 *3,399 *657 *657 -- -13 2,259 *2,272 15,278 18,059 2,780 6,388 *6,585 *197 1 1 -- 10,522 11,416 *894 Net income (less deficit) from other rental activity......................................................... *611 Net income.......................................................................... *611 Deficit.......................................................................... -- 2,329 2,361 *32 *197 *197 -- ---- 9,680 9,684 *4 *687 *687 -- 41 41 -- *5,077 *5,389 *312 Total net income (less deficit)....................................................................... 770,276 1,559,518 Net income.......................................................................... 1,324,213 1,875,184 Deficit.......................................................................... 553,937 315,666 957,070 1,100,770 143,701 1,083,116 1,290,693 207,577 3,529,501 4,192,537 663,036 1,689,859 1,924,917 235,058 61,973 93,336 *31,363 1,920,589 2,211,665 291,075 Footnotes at end of table. S Corporation Returns, 1997 Table 1.--All Returns: Total Receipts and Deductions, Portfolio Income, Rental Income, and Total Net Income, by Major Industrial Group--Continued [All figures are estimates based on samples--money amounts are in thousands of dollars] Manufacturing--continued Leather and leather products Stone, clay, and glass products Primary metal industries Fabricated metal products Machinery, except electrical Electrical and electronic equipment Motor vehicles and equipment (24) (25) (26) (27) (28) (29) (30) 4,751 1,811 21,438 11,719 10,562 1,213 Number of shareholders............................................1,099 10,069 Income from a trade or business: Total receipts ¹...................................................................... 2,466,240 13,057,099 Business receipts.......................................................... 2,461,613 12,884,988 Interest on Government obligations: State and local............................................................................... *525 *2,542 Net gain, noncapital assets.......................................................... *62 73,074 Other receipts.......................................................... 4,040 96,495 5,536 47,124 25,813 22,599 3,302 23,299,581 23,230,568 65,605,093 64,935,252 31,405,898 31,071,539 31,671,408 31,445,155 12,001,015 11,898,580 3,168 5,823 60,021 26,445 186,323 457,072 8,571 51,394 274,393 10,298 31,861 184,094 5,957 16,375 80,103 Total deductions...................................................................... 2,346,501 12,029,313 Cost of goods sold.......................................................... 1,723,107 7,937,533 Compensation of officers.......................................................... 94,928 359,778 Salaries and wages.......................................................... 171,676 1,020,626 Repairs.......................................................... 4,044 114,030 Bad debts.......................................................... 3,762 42,985 Rent paid on business property.......................................................... 18,122 183,005 Taxes paid.......................................................... 46,214 330,861 Interest paid.......................................................... 34,487 178,427 Amortization.......................................................... *1,246 15,598 Depreciation.......................................................... 22,220 555,033 Depletion.......................................................... -14,948 Advertising.......................................................... 45,170 68,467 Pension, profit-sharing, stock bonus, and annuity plans...................................................... *4,398 63,683 Employee benefit programs.......................................................... 39,914 119,177 Net loss, noncapital assets.......................................................... *609 *609 Other deductions.......................................................... 136,605 1,024,553 22,431,552 19,541,023 306,941 602,835 60,361,806 44,306,834 2,578,450 4,022,519 28,840,271 20,186,880 1,169,169 2,401,573 29,396,734 20,912,987 966,860 2,789,949 11,253,376 9,383,009 148,099 476,888 81,392 42,850 56,873 253,324 200,642 9,622 417,276 *591 31,101 291,921 106,372 640,652 1,468,667 683,592 37,619 1,685,765 -305,181 121,876 76,862 321,010 786,658 359,930 24,848 756,559 -237,075 109,429 63,317 324,025 597,762 283,120 20,553 610,289 *202 318,551 29,716 10,664 50,918 209,406 81,480 6,801 193,457 -53,116 81,500 159,592 318,116 768,307 212,599 488,480 146,697 309,960 41,239 124,088 *1,699 644,290 4,738 3,143,073 14,775 1,681,977 3,213 1,939,818 *108 444,386 Total receipts less total deductions ¹........................................................... 119,739 1,027,785 868,029 5,243,286 2,565,627 2,274,674 747,639 864,860 1,032,041 167,181 5,216,841 5,576,438 359,597 2,557,056 2,935,907 378,851 2,264,377 2,629,570 365,193 741,682 792,239 *50,557 116,927 1,174 46,214 547 585,263 24,293 176,207 1,272 551,049 15,636 129,880 10,531 555,834 23,777 93,592 4,966 38,363 *7,408 23,580 *3,408 *4,323 7,416 802 3,480 *2,189 64,668 -- 375,708 *367 394,166 *34 429,510 *510 1,778 -- 4,739 5,881 *1,142 40,101 41,009 *908 9,050 9,286 *236 2,874 4,512 *1,637 *124 *232 108 Item Number of returns....................................................................... 609 Net income (less deficit) from a trade or business......................................................... 119,214 Net income.......................................................................... 144,720 Deficit.......................................................................... *25,506 1,025,244 1,172,791 147,547 Portfolio income (less deficit) distributed to shareholders......................................................... 12,275 73,551 Dividend income.......................................................................... *5,423 *3,517 Interest income.......................................................................... 5,726 47,171 Royalty income (less loss).......................................................................... *99 *63 Net short-term capital gain (less loss)....................................................... *-2 *326 Net long-term capital gain (less loss)....................................................... *1,026 22,474 Other portfolio income (net).......................................................................... *3 -Real estate rental net income (less deficit)......................................................... *712 Net income.......................................................................... *865 Deficit.......................................................................... *153 Net income (less deficit) from other rental activity......................................................... *507 Net income.......................................................................... *507 Deficit.......................................................................... -- 8,567 8,582 *15 *126 *4,019 9,330 *1,322 *2,010 *1,716 *442 316 Total net income (less deficit)....................................................................... 132,708 1,107,487 Net income.......................................................................... 156,011 1,229,917 Deficit.......................................................................... *23,303 122,429 *4,028 9 990,545 1,148,416 157,871 10,173 *843 5,851,535 6,185,087 333,553 *1,524 *201 3,118,477 3,451,790 333,313 *2,185 *175 2,825,095 3,128,419 303,324 *1,716 -781,885 827,132 *45,247 Footnotes at end of table. 55 S Corporation Returns, 1997 Table 1.--All Returns: Total Receipts and Deductions, Portfolio Income, Rental Income, and Total Net Income, by Major Industrial Group--Continued [All figures are estimates based on samples--money amounts are in thousands of dollars] Manufacturing--continued Item Transportation equipment, except motor vehicles Instruments and related products Miscellaneous manufacturing and manufacturing not allocable Total Transportation Communication (31) (32) (33) (34) (35) (36) 16,619 105,803 83,951 14,500 7,352 Number of shareholders............................................ 5,384 10,433 Income from a trade or business: Total receipts ¹...................................................................... 8,814,639 7,472,538 Business receipts.......................................................... 8,648,688 7,321,119 Interest on Government obligations: State and local............................................................................... *2,002 4,782 Net gain, noncapital assets.......................................................... 26,091 24,154 Other receipts..........................................................137,858 122,483 38,892 212,346 152,109 42,425 17,812 28,202,234 27,932,029 114,202,022 111,864,882 88,209,868 86,645,561 16,138,938 15,624,180 9,853,216 9,595,141 5,529 72,114 192,562 36,597 673,535 1,627,007 24,465 489,266 1,050,575 6,886 167,259 340,613 *5,246 17,010 235,819 Total deductions...................................................................... 8,277,833 6,753,747 Cost of goods sold.......................................................... 6,222,988 3,936,576 Compensation of officers.......................................................... 232,014 431,971 Salaries and wages.......................................................... 545,757 908,690 Repairs.......................................................... 22,678 34,457 Bad debts.......................................................... 15,463 13,589 Rent paid on business property.......................................................... 88,774 110,121 Taxes paid.......................................................... 197,976 184,160 Interest paid.......................................................... 82,162 58,429 Amortization.......................................................... 7,564 14,625 Depreciation.......................................................... 145,834 145,676 Depletion.......................................................... --Advertising.......................................................... 56,345 69,054 Pension, profit-sharing, stock bonus, and annuity plans...................................................... 40,360 62,663 Employee benefit programs.......................................................... 102,686 85,912 Net loss, noncapital assets.......................................................... *2,574 *102 Other deductions.......................................................... 514,659 697,722 26,475,731 17,596,996 1,259,639 2,297,408 116,594 64,784 448,012 554,279 348,558 39,458 552,220 -422,224 111,251,359 49,517,356 3,059,545 16,030,871 2,017,352 326,375 4,823,501 3,460,505 1,964,927 326,784 5,454,071 *231 744,014 86,041,741 37,470,920 2,227,294 12,512,974 1,764,431 148,794 4,333,294 2,723,569 1,275,100 80,735 4,353,721 *231 415,748 15,724,947 6,903,200 595,066 2,556,279 120,487 162,309 314,856 442,068 444,878 209,232 627,762 -298,152 9,484,672 5,143,236 237,185 961,617 132,435 15,272 175,350 294,869 244,948 36,818 472,588 -30,114 126,943 265,414 2,376 2,380,827 358,526 1,081,429 40,726 22,045,148 297,207 887,490 6,998 17,543,236 27,383 97,363 *13,169 2,912,743 33,936 96,576 *20,558 1,589,169 Total receipts less total deductions ¹........................................................... 536,806 718,791 1,726,503 2,950,663 2,168,127 413,991 368,545 1,720,974 2,212,680 491,705 2,914,066 6,248,166 3,334,101 2,143,662 4,020,709 1,877,048 407,105 1,448,295 1,041,190 363,299 779,162 415,863 477,279 8,856 90,596 71,684 1,360,635 46,046 461,278 *1,772 488,015 26,044 247,073 *1,772 757,431 17,283 117,345 -- 115,189 2,719 96,860 -- 119,336 18,057 16,593 979 *485 186,781 26 826,766 6,714 194,726 1,807 617,871 *3,952 14,169 *956 Net income (less deficit) from a trade or business......................................................... 534,804 Net income.......................................................................... 623,218 Deficit.......................................................................... 88,414 714,009 885,212 171,204 Portfolio income (less deficit) distributed to shareholders......................................................... 126,525 92,465 Dividend income.......................................................................... 2,124 4,455 Interest income.......................................................................... 32,126 39,080 Royalty income (less loss).......................................................................... 602 *1,149 Net short-term capital gain (less loss)....................................................... *252 *762 Net long-term capital gain (less loss)....................................................... 91,421 47,019 Other portfolio income (net).......................................................................... --- 56 Electric, gas, and sanitary services 3,292 Number of returns....................................................................... 2,406 56 Transportation and public utilities (37) Real estate rental net income (less deficit)......................................................... 2,373 Net income.......................................................................... *2,448 Deficit.......................................................................... 75 *1,714 *3,049 *1,335 21,919 21,994 *75 86,232 92,717 6,485 75,266 79,390 *4,124 7,028 7,337 *308 3,938 *5,990 *2,053 Net income (less deficit) from other rental activity......................................................... *3,936 Net income.......................................................................... *3,936 Deficit.......................................................................... -- *460 *460 -- *2,870 *2,870 -- 61,998 130,813 68,815 38,099 105,745 67,646 17,922 19,091 *1,169 *5,977 *5,977 -- Total net income (less deficit)....................................................................... 667,638 808,647 Net income.......................................................................... 747,527 968,562 Deficit.......................................................................... 79,888 159,915 2,223,042 2,590,969 367,927 4,422,930 7,560,131 3,137,201 2,745,041 4,534,436 1,789,395 1,189,486 2,152,136 962,650 488,403 873,559 385,156 Footnotes at end of table. S Corporation Returns, 1997 Table 1.--All Returns: Total Receipts and Deductions, Portfolio Income, Rental Income, and Total Net Income, by Major Industrial Group--Continued [All figures are estimates based on samples--money amounts are in thousands of dollars] Wholesale and retail trade Wholesale trade Item Total (38) Total Groceries and related products Machinery, equipment, and supplies Retail trade Miscellaneous wholesale trade Total Building materials, garden supplies, and mobile home dealers General merchandise stores (39) (40) (41) (42) (43) (44) 164,477 13,111 23,203 128,162 416,942 19,258 5,730 Number of shareholders............................................ 1,094,792 309,337 Income from a trade or business: Total receipts ¹...................................................................... 1,337,278,598 571,323,647 Business receipts.......................................................... 1,320,780,014 565,511,148 Interest on Government obligations: State and local............................................................................... 172,748 118,618 Net gain, noncapital assets.......................................................... 1,292,822 505,982 Other receipts.......................................................... 15,033,014 5,187,899 26,899 42,063 240,376 782,574 36,490 11,328 79,054,274 78,710,478 54,686,489 53,721,838 437,582,884 433,078,832 763,668,540 752,999,754 35,768,720 35,445,767 9,755,375 9,639,689 3,141 13,428 327,227 9,263 195,143 760,244 106,213 297,411 4,100,428 54,130 785,568 9,829,088 *1,033 22,055 299,865 *1,656 *515 113,514 78,034,098 68,267,312 1,393,063 3,283,954 234,096 95,473 560,884 523,348 351,523 50,996 375,883 -203,227 52,060,148 39,573,811 1,591,264 4,055,231 239,483 99,067 555,925 634,739 539,016 27,670 810,468 162 231,198 424,797,838 346,477,972 8,826,813 26,163,927 1,421,422 1,058,169 4,234,086 5,806,525 3,265,616 248,702 3,202,211 *10,215 2,516,101 751,119,473 568,422,157 13,654,744 61,913,996 4,190,169 974,421 18,216,395 12,052,386 6,305,889 637,741 7,333,549 *9,074 11,195,518 34,945,069 25,775,035 912,524 3,328,836 173,627 105,878 590,146 641,043 439,763 19,572 349,739 1,109 369,358 9,611,482 6,165,598 259,077 1,253,442 57,827 21,775 447,032 202,909 90,354 8,529 94,661 -181,233 111,312 169,531 *1,983 2,411,512 202,192 321,209 627 3,178,086 977,585 1,497,586 30,642 19,060,266 844,641 3,095,912 117,613 42,155,267 76,987 174,701 *19,291 1,967,459 13,999 38,323 358 776,363 Total receipts less total deductions ¹........................................................... 29,068,124 16,431,563 1,020,176 2,626,340 12,785,047 12,549,066 823,651 143,893 1,017,035 1,303,131 286,097 2,617,077 2,878,955 261,878 12,678,833 15,240,879 2,562,045 12,494,937 19,098,167 6,603,230 822,618 1,183,313 360,695 142,236 336,060 193,824 408,644 12,431 78,227 *14,709 271,690 23,534 126,274 768 4,337,727 122,654 732,137 96,281 3,894,201 92,782 1,022,622 27,960 132,745 18,217 84,558 *327 84,795 *440 10,106 *371 Number of returns....................................................................... 583,006 Total deductions...................................................................... 1,308,210,474 554,892,083 Cost of goods sold.......................................................... 1,024,343,917 454,319,095 Compensation of officers.......................................................... 25,524,258 11,811,140 Salaries and wages.......................................................... 95,575,159 33,503,112 Repairs.......................................................... 6,092,926 1,895,001 Bad debts.......................................................... 2,230,183 1,252,709 Rent paid on business property.......................................................... 23,612,081 5,350,895 Taxes paid.......................................................... 19,050,111 6,964,612 Interest paid.......................................................... 10,499,512 4,156,156 Amortization.......................................................... 966,845 327,369 Depreciation.......................................................... 11,760,628 4,388,561 Depletion.......................................................... 19,451 *10,377 Advertising.......................................................... 14,164,518 2,950,526 Pension, profit-sharing, stock bonus, and annuity plans...................................................... 2,140,324 1,291,089 Employee benefit programs.......................................................... 5,091,153 1,988,327 Net loss, noncapital assets.......................................................... 150,864 33,252 Other deductions.......................................................... 66,988,541 24,649,863 Net income (less deficit) from a trade or business......................................................... 28,895,377 16,312,945 Net income.......................................................................... 38,618,119 19,422,965 Deficit.......................................................................... 9,722,742 3,110,020 (45) Portfolio income (less deficit) distributed to shareholders......................................................... 8,914,747 5,018,060 Dividend income.......................................................................... 251,401 158,619 Interest income.......................................................................... 1,961,745 936,638 Royalty income (less loss).......................................................................... 139,718 111,758 Net short-term capital gain (less loss)....................................................... 100,190 44,251 Net long-term capital gain (less loss)....................................................... 6,453,475 3,759,908 Other portfolio income (net).......................................................................... 8,218 6,887 -931 -401 45,583 55,939 *-599 -- 304,059 *148 121,205 *311 3,334,644 6,427 2,693,568 1,331 30,223 *19 *73,879 -- Real estate rental net income (less deficit)......................................................... 308,506 Net income.......................................................................... 419,352 Deficit.......................................................................... 110,846 92,742 169,994 77,252 13,521 16,707 *3,186 7,062 7,676 *615 72,159 145,611 73,451 215,764 249,358 33,594 20,189 24,123 *3,934 3,785 *7,259 *3,474 Net income (less deficit) from other rental activity......................................................... 226,958 Net income.......................................................................... 256,602 Deficit..........................................................................29,644 108,133 119,262 *11,129 *12,637 *12,637 -- 73,988 84,298 *10,310 21,508 22,327 *819 118,784 137,299 18,515 *7,564 *7,670 106 ---- Total net income (less deficit)....................................................................... 38,345,586 21,531,880 Net income.......................................................................... 47,154,079 24,284,843 Deficit.......................................................................... 8,808,493 2,752,963 1,451,836 1,664,018 212,182 2,969,817 3,210,697 240,881 17,110,227 19,410,127 2,299,900 16,723,686 22,769,958 6,046,272 983,116 1,310,889 327,774 230,817 398,302 167,485 Footnotes at end of table. 57 S Corporation Returns, 1997 Table 1.--All Returns: Total Receipts and Deductions, Portfolio Income, Rental Income, and Total Net Income, by Major Industrial Group--Continued [All figures are estimates based on samples--money amounts are in thousands of dollars] Wholesale and retail trade--continued Retail trade--continued Wholesale Automotive dealers and service stations Apparel and accessory stores Furniture and home furnishing stores (47) (48) (49) (50) (51) (52) 56,119 20,536 24,201 130,344 121,762 1,587 Number of shareholders............................................ 69,856 99,380 Income from a trade or business: Total receipts ¹...................................................................... 81,149,339 388,586,521 Business receipts.......................................................... 80,030,769 382,947,477 Interest on Government obligations: State and local............................................................................... 8,768 5,093 Net gain, noncapital assets.......................................................... 58,367 311,530 Other receipts.......................................................... 1,051,436 5,322,421 33,340 43,255 267,157 221,769 2,881 13,813,227 13,577,572 31,613,613 31,097,460 84,484,686 83,239,790 118,497,059 117,021,229 2,286,412 2,269,112 *754 *362 234,538 6,241 40,436 469,476 3,674 208,946 1,032,276 26,911 143,357 1,305,562 -*1,272 *16,027 Total deductions...................................................................... 79,959,321 384,873,634 Cost of goods sold.......................................................... 60,154,506 334,566,057 Compensation of officers.......................................................... 1,007,061 3,635,005 Salaries and wages.......................................................... 7,402,672 18,393,551 Repairs.......................................................... 640,004 1,005,823 Bad debts.......................................................... 78,217 319,186 Rent paid on business property.......................................................... 1,955,315 3,626,047 Taxes paid..........................................................1,270,742 3,346,889 Interest paid..........................................................486,645 2,799,427 Amortization.......................................................... 85,264 89,336 Depreciation.......................................................... 1,080,780 1,798,711 Depletion.......................................................... --Advertising.......................................................... 793,264 3,627,569 Pension, profit-sharing, stock bonus, and annuity plans...................................................... 124,730 202,905 Employee benefit programs.......................................................... 478,401 1,246,314 Net loss, noncapital assets.......................................................... 2,151 17,071 Other deductions.......................................................... 4,399,570 10,199,743 13,687,596 8,448,341 470,107 1,410,090 75,364 22,335 916,865 308,170 142,946 20,249 161,317 *7,081 352,883 30,533,083 19,524,266 940,437 3,396,379 176,495 115,068 1,238,677 660,171 210,626 14,836 399,319 -1,117,960 82,569,604 34,726,233 2,641,746 15,571,481 1,499,661 55,804 5,731,446 3,577,419 1,128,760 283,194 2,025,542 -2,465,769 114,939,683 79,062,121 3,788,787 11,157,545 561,368 256,158 3,710,867 2,045,042 1,007,368 116,762 1,423,479 *884 2,287,481 2,198,917 1,602,666 58,374 158,050 7,757 *3,053 44,791 33,114 37,467 *1,735 38,518 -18,474 35,735 36,880 *8,188 1,271,045 54,901 153,692 *443 2,529,811 58,053 495,850 45,356 12,263,290 277,330 471,750 24,755 8,747,986 *4,594 6,915 -183,410 Total receipts less total deductions ¹........................................................... 1,190,017 3,712,887 125,630 1,080,530 1,915,081 3,557,376 87,494 124,877 456,686 331,809 1,074,289 1,355,908 281,619 1,911,408 3,925,556 2,014,148 3,530,465 5,090,176 1,559,710 87,494 96,987 *9,493 95,021 2,147 14,719 *138 1,155,099 6,075 71,016 1,078 574,003 13,324 162,357 *3,797 742,180 28,705 175,555 *21,336 *2,485 -*2,485 -- *228 *421 15,638 47,865 -- *77,789 -- 1,076,489 *21 378,662 *225 468,699 *20 --- Item Food stores (46) Number of returns....................................................................... 38,992 58 Net income (less deficit) from a trade or business......................................................... 1,181,249 Net income.......................................................................... 1,700,602 Deficit.......................................................................... 519,353 3,707,794 5,049,865 1,342,071 Portfolio income (less deficit) distributed to shareholders......................................................... 152,444 957,914 Dividend income.......................................................................... 10,613 13,262 Interest income.......................................................................... 105,439 398,873 Royalty income (less loss).......................................................................... 68 *844 Net short-term capital gain (less loss)....................................................... -1,043 -6,571 Net long-term capital gain (less loss)....................................................... 37,366 550,460 Other portfolio income (net).......................................................................... (²) *1,046 58 Eating and drinking places Miscellaneous retail stores and retail trade not allocable Real estate rental net income (less deficit)......................................................... 33,793 Net income.......................................................................... 38,305 Deficit..........................................................................*4,512 56,540 62,837 6,296 *385 *482 *97 10,607 11,166 *559 24,815 28,393 *3,579 65,650 76,793 11,143 ---- Net income (less deficit) from other rental activity......................................................... *21,640 Net income.......................................................................... *21,640 Deficit.......................................................................... -- 8,059 25,895 17,835 *-30 *392 *422 *18,031 *18,031 -- 23,022 23,174 *152 40,497 40,497 -- *41 *41 -- Total net income (less deficit)....................................................................... 1,389,126 4,730,308 Net income.......................................................................... 1,874,273 5,901,918 Deficit.......................................................................... 485,147 1,171,610 220,252 531,989 311,737 2,258,026 2,469,610 211,584 2,533,248 4,461,589 1,928,341 4,378,793 5,821,386 1,442,594 90,020 99,278 *9,258 Footnotes at end of table. S Corporation Returns, 1997 Table 1.--All Returns: Total Receipts and Deductions, Portfolio Income, Rental Income, and Total Net Income, by Major Industrial Group--Continued [All figures are estimates based on samples--money amounts are in thousands of dollars] Finance, insurance, and real estate Total Banking Credit agencies other than banks (53) (54) Item Security, commodity brokers, and services Insurance Insurance agents, brokers, and services (57) Real estate Holding and other investment companies, except bank holding companies (55) (56) (58) (59) (60) 758 15,468 15,029 -- 43,990 281,126 25,782 Number of shareholders............................................ 877,115 8,789 Income from a trade or business: Total receipts ¹...................................................................... 104,017,724 4,230,536 Business receipts.......................................................... 91,985,536 1,748,776 Interest on Government obligations: State and local............................................................................... 372,152 104,297 Net gain, noncapital assets.......................................................... 549,630 25,805 Other receipts.......................................................... 11,110,406 2,351,659 30,260 24,729 -- 73,316 679,769 60,251 8,475,315 6,258,146 12,766,071 10,885,289 --- 18,818,469 18,456,348 55,610,126 52,377,961 4,117,207 2,259,015 12,993 103,637 2,100,538 78,346 33,712 1,768,723 ---- 10,768 32,084 319,270 87,741 292,527 2,851,896 78,006 61,865 1,718,320 7,665,605 -581,882 2,210,333 49,326 397,552 267,689 273,419 1,238,099 36,400 142,076 *670 206,292 11,723,136 -2,441,596 3,215,787 38,631 48,158 324,141 362,068 729,509 13,058 121,937 -141,712 -------------- 16,901,231 2,980,396 2,577,225 5,014,080 125,752 34,446 659,329 595,250 193,577 73,107 221,402 *717 361,786 52,629,072 20,398,526 3,238,613 10,742,028 556,132 202,485 1,635,503 1,411,201 1,754,766 92,911 751,623 *290 948,472 3,864,123 503,122 201,679 740,435 22,642 59,213 69,817 114,924 251,260 8,330 71,710 *167 21,705 50,426 83,986 26,629 2,100,826 126,793 84,168 *5,887 4,069,691 ----- 193,666 249,226 *280 3,620,993 282,137 371,926 81,792 10,160,668 19,752 39,180 6,684 1,733,502 809,710 1,042,934 -- 1,917,238 2,981,054 253,084 796,716 1,422,766 626,050 964,588 2,436,812 1,472,224 ---- 1,906,470 2,222,966 316,495 2,893,312 6,305,329 3,412,017 175,077 1,487,046 1,311,969 370,186 5,407 239,385 *55 2,279,685 95,320 320,162 *67 ----- 482,877 31,378 199,373 -- 3,379,348 101,576 1,428,594 15,623 3,445,834 368,137 568,102 63,917 12,457 564,663 -- 6,620 40,710 183,550 100,649 *12,233 1,282,643 16,831 --- 241,286 *4,219 1,776,105 16,741 2,227,281 34,847 Number of returns....................................................................... 382,153 Total deductions...................................................................... 96,055,527 3,272,359 Cost of goods sold.......................................................... 23,882,044 -Compensation of officers.......................................................... 9,313,186 272,191 Salaries and wages.......................................................... 22,346,609 423,946 Repairs.......................................................... 837,098 44,616 Bad debts.......................................................... 816,840 74,985 Rent paid on business property.......................................................... 3,001,827 45,347 Taxes paid.......................................................... 2,853,392 96,530 Interest paid.......................................................... 5,721,291 1,554,081 Amortization.......................................................... 247,669 23,863 Depreciation.......................................................... 1,397,146 88,398 Depletion.......................................................... 1,850 6 Advertising.......................................................... 1,708,921 28,954 Pension, profit-sharing, stock bonus, and annuity plans...................................................... 699,111 26,337 Employee benefit programs.......................................................... 887,491 59,006 Net loss, noncapital assets.......................................................... 124,439 3,166 Other deductions.......................................................... 22,216,612 530,933 Total receipts less total deductions ¹........................................................... 7,962,197 958,177 Net income (less deficit) from a trade or business......................................................... 7,590,045 Net income.......................................................................... 14,748,463 Deficit.......................................................................... 7,158,418 853,880 873,543 *19,663 Portfolio income (less deficit) distributed to shareholders......................................................... 9,997,872 39,943 Dividend income.......................................................................... 605,393 3,575 Interest income.......................................................................... 2,775,658 20,042 Royalty income (less loss).......................................................................... 79,667 4 Net short-term capital gain (less loss)....................................................... 808,048 49 Net long-term capital gain (less loss)....................................................... 5,641,962 14,000 Other portfolio income (net).......................................................................... 87,144 *2,274 Real estate rental net income (less deficit).........................................................2,797,388 Net income.......................................................................... 4,362,852 Deficit.......................................................................... 1,565,463 -651 3,701 4,352 2,075 5,133 3,058 2,869 *4,576 *1,707 ---- 3,952 *5,874 *1,922 2,752,593 4,268,635 1,516,041 36,550 74,933 38,383 Net income (less deficit) from other rental activity......................................................... 35,484 Net income.......................................................................... 82,201 Deficit.......................................................................... 46,717 155 936 *781 648 *1,338 *690 3,221 3,258 37 ---- *1,398 *1,553 *156 31,778 68,443 36,665 -1,716 6,673 *8,389 Total net income (less deficit)....................................................................... 20,420,790 893,327 Net income.......................................................................... 26,888,171 905,732 Deficit.......................................................................... 6,467,381 *12,406 1,169,626 1,642,823 473,197 3,250,364 3,864,630 614,266 ---- 2,394,697 2,666,147 271,451 9,057,032 13,087,133 4,030,100 3,655,745 4,721,707 1,065,962 Footnotes at end of table. 59 S Corporation Returns, 1997 Table 1.--All Returns: Total Receipts and Deductions, Portfolio Income, Rental Income, and Total Net Income, by Major Industrial Group--Continued [All figures are estimates based on samples--money amounts are in thousands of dollars] Services Hotels Item Total and other lodging Personal services Business services places (61) 60 Auto repair; Amusement miscellaneous repair and recreation services services Nature of Other services business not allocable (62) (63) (64) (65) (66) (67) (68) Number of returns....................................................................... 860,445 19,480 60,188 261,096 83,119 73,351 363,210 *1,821 Number of shareholders............................................ 1,434,631 Income from a trade or business: 51,530 96,516 426,167 126,758 144,886 588,775 *6,384 Total receipts ¹...................................................................... 451,975,219 13,989,534 Business receipts.......................................................... 441,010,668 13,677,658 Interest on Government obligations: State and local............................................................................... 109,073 7,360 Net gain, noncapital assets.......................................................... 1,480,340 40,010 Other receipts.......................................................... 9,375,138 264,506 17,057,821 16,876,169 165,324,219 161,289,106 36,724,473 36,241,725 37,993,094 36,240,530 180,886,077 176,685,480 *173,806 *172,529 *746 29,106 151,800 33,598 661,234 3,340,281 *392 241,068 241,289 19,195 228,285 1,505,083 47,782 280,638 3,872,178 --*1,277 Total deductions...................................................................... 423,424,597 13,629,782 Cost of goods sold.......................................................... 132,434,305 2,047,841 Compensation of officers.......................................................... 42,498,717 409,590 Salaries and wages.......................................................... 91,959,318 2,786,994 Repairs.......................................................... 4,241,291 531,146 Bad debts.......................................................... 974,099 22,801 Rent paid on business property.......................................................... 16,972,342 591,188 Taxes paid.......................................................... 16,459,162 868,728 Interest paid.......................................................... 6,158,781 1,182,648 Amortization.......................................................... 1,369,553 63,771 Depreciation.......................................................... 11,014,245 1,063,206 Depletion.......................................................... *49 -Advertising.......................................................... 5,508,822 355,393 Pension, profit-sharing, stock bonus, and annuity plans...................................................... 3,512,907 9,335 Employee benefit programs.......................................................... 4,778,794 119,034 Net loss, noncapital assets.......................................................... 148,074 5,875 Other deductions.......................................................... 85,394,139 3,572,232 16,220,995 4,886,858 1,163,467 3,254,440 307,319 63,026 1,446,785 745,892 240,863 51,824 591,630 -440,637 154,603,330 63,843,249 12,242,839 31,783,857 977,210 284,235 4,054,370 5,289,929 1,438,791 271,472 3,377,065 *49 1,646,328 35,358,708 17,165,633 1,989,997 4,833,274 404,679 65,947 1,867,016 1,287,483 600,081 53,096 1,549,601 -538,472 36,352,495 10,147,855 2,817,150 6,381,207 699,936 85,592 1,715,655 1,574,558 900,186 656,647 1,920,962 -792,357 167,259,287 34,342,868 23,875,675 42,919,546 1,321,001 452,497 7,297,327 6,692,572 1,796,212 272,742 2,511,782 *( ² ) 1,735,635 *161,759 *123,291 *8,449 *5,526 *148 -*3,800 *1,454 --*2,630 --- 61,801 121,120 *218 2,845,114 1,043,214 1,723,010 33,478 26,594,234 64,595 338,579 21,411 4,578,845 137,377 240,052 38,939 8,244,021 2,196,585 2,236,998 48,153 39,559,694 ---*16,462 836,825 10,720,889 1,365,765 1,640,599 13,626,790 *12,047 836,080 1,327,227 491,147 10,687,291 13,992,529 3,305,238 1,365,374 2,026,234 660,860 1,621,404 3,799,273 2,177,869 13,579,009 17,559,363 3,980,354 *12,047 *13,825 *1,778 117,787 6,719 50,777 -- 3,320,921 95,848 626,362 41,978 85,571 6,529 53,863 *10,596 821,997 20,800 248,861 219,519 2,185,320 68,161 548,321 76,843 *9,943 -*2,329 -- 2,134 11,023 *3,321 -76,765 5,476 -- 58,083 *73 2,470,992 74,718 10,628 *634 406,454 *3,129 1,484,418 2,100 *7,615 -- Total receipts less total deductions ¹........................................................... 28,550,622 359,752 Net income (less deficit) from a trade or business......................................................... 28,441,549 Net income.......................................................................... 39,791,342 Deficit.......................................................................... 11,349,794 352,392 1,086,717 734,325 Portfolio income (less deficit) distributed to shareholders......................................................... 6,721,405 189,810 Dividend income.......................................................................... 207,522 9,464 Interest income.......................................................................... 1,693,544 165,361 Royalty income (less loss).......................................................................... 348,935 -Net short-term capital gain (less loss)....................................................... -54,776 34 Net long-term capital gain (less loss)....................................................... 4,444,232 13,657 Other portfolio income (net).......................................................................... 81,947 *1,294 60 Real estate rental net income (less deficit)......................................................... 302,276 Net income.......................................................................... 413,284 Deficit.......................................................................... 111,008 43,525 62,343 18,818 26,087 *30,295 *4,208 98,488 117,620 19,132 39,819 48,167 *8,348 59,890 69,318 9,429 34,468 85,542 51,074 ---- Net income (less deficit) from other rental activity......................................................... 264,026 Net income.......................................................................... 484,512 Deficit.......................................................................... 220,486 *3,359 *3,359 -- *615 *623 *9 171,369 313,733 142,364 26,718 96,611 69,893 -278 5,826 *6,104 62,244 64,360 *2,116 ---- Total net income (less deficit)....................................................................... 35,729,256 589,086 Net income.......................................................................... 46,255,320 1,264,566 Deficit.......................................................................... 10,526,064 675,480 980,568 1,443,755 463,187 14,278,068 17,371,367 3,093,299 1,517,482 2,217,648 700,167 2,503,013 4,436,497 1,933,484 15,861,040 19,521,487 3,660,447 *21,991 *22,638 *648 * Estimate should be used with caution because of the small number of sample returns on which it is based. ¹ Includes interest on Government obligations: State and local, which is not reflected in net income (less deficit) from a trade or business. ² Less than $500. NOTE: Detail may not add to total due to rounding. S Corporation Returns, 1997 Table 2.--Returns With Net Income: Total Receipts and Deductions, Portfolio Income, Rental Income, and Total Net Income, by Major Industrial Group [All figures are estimates based on samples--money amounts are in thousands of dollars] Mining Item All Agriculture, industries forestry, and fishing (1) (2) Oil Total (3) Metal Coal and mining mining gas minerals, extraction except fuels (4) (5) Nonmetallic (6) (7) Number of returns..................................................................................... 1,555,396 52,681 8,905 *378 304 6,915 1,308 Number of shareholders...................................................................... 2,959,804 129,538 20,083 *720 978 15,745 2,640 37,964,683 12,923,864 *214,536 2,780,697 6,973,569 2,955,062 Business receipts.................................................................... 2,347,208,788 35,354,050 Interest on Government obligations: State and local............................................................................ 816,487 22,901 Net gain, noncapital assets.................................................................... 5,026,520 310,069 Other receipts.................................................................... 40,538,128 2,277,663 Total deductions...................................................................... 2,241,516,528 34,810,557 11,797,676 *169,759 2,684,753 6,068,026 2,875,138 11,243 249,279 865,666 10,607,355 -*24,670 *20,108 *177,892 *1,699 *43,352 50,893 2,632,923 7,635 159,592 738,316 5,230,782 *1,909 21,666 56,349 2,565,757 Cost of goods sold.................................................................... 1,525,662,198 19,154,893 5,540,279 Compensation of officers.................................................................... 89,391,084 1,135,413 270,930 Salaries and wages.................................................................... 219,392,089 2,945,847 922,423 Repairs.................................................................... 13,874,102 773,748 274,751 Bad debts.................................................................... 3,886,180 38,958 15,402 Rent paid on business property.................................................................... 43,035,555 1,017,956 243,986 Taxes paid.................................................................... 46,973,862 719,800 436,392 Interest paid.................................................................... 22,687,280 691,743 258,424 Amortization.................................................................... 2,295,708 13,987 19,144 Depreciation.................................................................... 34,608,054 1,297,123 597,385 Depletion.................................................................... 211,633 *798 119,318 Advertising.................................................................... 21,962,219 159,401 19,919 Pension, profit-sharing, stock bonus, and annuity plans............................................................................ 8,952,730 70,733 47,649 Employee benefit programs.................................................................... 16,193,063 192,645 188,450 Net loss, noncapital assets.................................................................... 243,186 5,155 *1,471 Other deductions.................................................................... 192,147,585 6,592,356 1,651,431 Total receipts less total deductions ¹...................................................................... 152,073,395 3,154,126 2,316,509 *71,955 *5,450 *1,308 *18,029 *( ² ) *5,402 *9,695 *2,934 -*8,047 *4,411 *155 1,661,086 *15,207 155,451 56,593 *4,101 65,050 104,756 46,562 3,439 128,114 43,502 1,093 2,028,931 167,023 656,213 168,852 6,759 157,808 242,308 162,874 11,763 274,328 *21,227 10,370 1,778,307 83,249 109,451 31,276 4,542 15,726 79,632 46,056 3,942 186,896 50,178 8,302 *2,728 *1,667 -*46,111 *36,644 10,073 141,303 68 196,524 147,774 17,818 25,261 *1,315 1,277,932 1,742,786 17,030 20,220 *88 130,864 389,304 Income from a trade or business: Total receipts ¹...................................................................... 2,393,589,923 Net income (less deficit) from a trade or business.................................................................... 151,256,908 3,131,225 2,305,266 *36,644 146,074 1,735,152 387,396 Net income.................................................................... 154,605,010 Deficit....................................................................3,348,103 Portfolio income (less deficit) 3,219,819 88,594 2,416,555 111,289 *36,644 -- 158,307 *12,232 1,833,696 98,544 387,908 *512 distributed to shareholders.................................................................... 34,938,205 1,156,974 881,352 *3,504 87,608 739,353 50,886 Dividend income...................................................................... 1,341,751 21,904 Interest income...................................................................... 8,230,825 178,909 Royalty income (less loss)...................................................................... 789,568 12,827 Net short-term capital gain (less loss).................................................................................... 1,297,395 14,440 Net long-term capital gain (less loss).................................................................................... 23,098,916 926,269 Other portfolio income (net)...................................................................... 179,750 *2,625 Real estate rental net income 46,678 175,854 124,561 -*3,504 -- *6,271 26,885 *1,607 36,131 119,975 122,954 4,276 25,491 -- 81,870 -- *7,874 69,128 *4,868 450,553 1,837 --- 44,531 441 390,869 *297 15,153 *1,099 (less deficit).................................................................... 5,084,640 68,020 16,244 *48 *1,510 11,147 3,539 Net income...................................................................... 5,383,626 Deficit...................................................................... 298,986 Net income (less deficit) 73,372 5,352 17,356 *1,112 *48 -- *1,521 11 11,860 *713 3,927 *388 from other rental activity.................................................................... 842,321 15,034 17,098 -- 1,079 3,463 *12,557 17,377 *278 3,219,960 --*40,196 1,079 -236,272 *3,741 *278 2,489,114 *12,557 -454,378 Net income...................................................................... 948,440 Deficit...................................................................... 106,119 Total net income....................................................................... 192,122,074 15,179 *145 4,371,253 Footnotes at end of table. 61 S Corporation Returns, 1997 Table 2.--Returns With Net Income: Total Receipts and Deductions, Portfolio Income, Rental Income, and Total Net Income, by Major Industrial Group--Continued [All figures are estimates based on samples--money amounts are in thousands of dollars] Construction Manufacturing General building Item Total contractors Heavy Special and construction trade operative contractors contractors (10) (11) Total Food and Tobacco kindred manufac- Textile mill products tures products (13) (14) builders (8) (9) (12) (15) Number of returns..................................................................................... 182,159 66,089 6,517 109,552 99,616 5,904 3 1,928 Number of shareholders...................................................................... 292,496 103,002 12,061 177,434 245,320 31,153 12 4,468 Income from a trade or business: 62 Total receipts ¹...................................................................... 276,760,967 124,507,265 31,748,831 120,504,870 425,580,248 56,446,022 371,132 14,074,391 Business receipts.................................................................... 274,441,993 123,766,422 Interest on Government obligations: State and local............................................................................ 48,856 25,592 Net gain, noncapital assets.................................................................... 269,576 50,185 Other receipts.................................................................... 2,000,542 665,067 Total deductions...................................................................... 260,768,521 118,912,771 31,014,052 119,661,520 421,174,658 55,932,706 351,191 13,956,816 10,111 105,378 619,290 29,830,260 13,152 114,013 716,185 112,025,490 134,534 820,693 3,450,364 392,282,211 8,909 67,308 437,099 53,210,238 -12,100 7,840 309,895 5,438 30,988 81,149 13,138,863 Cost of goods sold.................................................................... 207,734,250 104,594,563 23,673,068 Compensation of officers.................................................................... 8,897,481 2,656,346 731,004 Salaries and wages.................................................................... 12,591,912 3,425,393 1,337,641 Repairs.................................................................... 1,112,160 246,465 167,912 Bad debts.................................................................... 328,619 61,529 23,289 Rent paid on business property.................................................................... 2,108,102 448,447 204,146 Taxes paid.................................................................... 4,957,392 1,257,156 503,423 Interest paid.................................................................... 1,515,293 608,537 190,942 Amortization.................................................................... 40,278 11,432 2,425 Depreciation.................................................................... 3,647,887 697,633 969,749 Depletion.................................................................... 11,834 *189 11,645 Advertising.................................................................... 681,144 260,587 25,964 Pension, profit-sharing, stock bonus, and annuity plans............................................................................ 973,072 240,058 143,533 Employee benefit programs.................................................................... 2,122,932 462,196 243,473 Net loss, noncapital assets.................................................................... 29,980 3,445 *14,695 Other deductions.................................................................... 14,016,186 3,938,797 1,587,350 Total receipts less total deductions ¹...................................................................... 15,992,445 5,594,494 1,918,571 79,466,619 5,510,131 7,828,877 697,783 243,801 1,455,510 3,196,812 715,813 26,422 1,980,506 -394,593 286,791,333 13,032,683 28,786,727 1,951,059 792,402 3,888,977 8,489,945 4,035,755 398,297 9,228,656 59,035 3,720,201 41,439,178 771,069 3,137,258 265,431 51,305 335,850 810,836 440,832 41,062 1,060,818 -1,065,417 206,652 4,959 12,652 763 20 1,555 45,999 4,060 14,687 3,495 -3,026 10,445,651 329,618 660,477 68,995 31,490 97,506 253,432 155,616 6,355 315,489 -39,323 589,481 1,417,264 11,839 8,490,038 8,479,380 1,981,748 4,244,752 28,778 24,851,863 33,298,038 189,645 449,143 4,377 3,148,016 3,235,784 251 1,730 2 10,043 61,237 41,212 140,925 *1,577 551,198 935,528 Net income (less deficit) from a trade or business.................................................................... 15,943,590 5,568,902 1,908,459 8,466,228 33,163,504 3,226,875 61,237 930,090 Net income.................................................................... 16,082,675 Deficit........................ [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Airs%3A538c9a2765a8b124. Public record. Not legal advice.