# S Corporation Returns, 1998 > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/agency%3Airs%3Acee297a03a6d68e3 ## Record - **Collection:** Agency decision - **Document type:** Agency decision ## Text S Corporation Returns, 1998 by Susan Wittman D ata for Tax Year 1998 show a continuation in the growth of S corporations that was affected 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]. The total number of S corporation filings grew by over 5.5 percent to nearly 2.6 million, up from nearly 2.5 million for Tax Year 1997. S corporations continue to be the single largest corporate entity type filing a Form 1120 series U. S. Tax Return for a Corporation, with over 53.4 percent of all corporations filing a Form 1120S (Figure A). The average annual growth since 1986, the year in which the first of four major tax reform acts affected S corporations, is 10.3 percent. Over the same period, all other corporations have experienced an average annual decline of 1.1 percent [2]. NorthAmericanIndustryClassificationSystem 46 46 In 1993, the United States, Canada, and Mexico entered into a trade agreement known as the North American Free Trade Agreement (NAFTA), the goal of which was to eliminate trade barriers and trade tariffs within the continent for the three participants. The desired economic effect of this trade agreement was to reduce costs and thus improve economic efficiency. Each signatory had established government agencies that produced and tracked economic performance and had a system that classified economic data by some industry classification measure. These countries agreed that a consistent and common system was needed to properly measure economic performance and track the impact of NAFTA on each participating country. The resulting system is known as the North American Industry Classification System (NAICS). This classification system has defined itself as “a comprehensive system covering the entire field of economic activities, producing and nonproducing [3].” The system allows for improved industry comparability among the three participating countries, and additionally is more compatible with the existing two-digit level of the International Standard Industrial Classifi- Susan Wittman is an economist with the Corporation Special Projects Section. This article was prepared under the direction of Doug Shearer, Chief. cation (ISIC Rev.3) of the United Nations. The NAICS system is based on grouping together, in one industry, economic units that have similar production processes; i.e., the system is production-oriented. The NAICS system has twenty sectors. Each industry within these sectors is grouped by its individual production criterion. While the structure of NAICS does not explicitly reflect a distinction of goods versus services, there are five mostly goodsproducing sectors, and the remaining fifteen are service-producing sectors. The Internal Revenue Service and the Statistics of Income Division have based their industry classification systems largely on the NAICS system with some modifications. Statistics of Income publishes corporate data on four levels: division, sector, major, and minor code. Data presented in this article are generally shown by division, the highest level in the classification system, and then by sector, the secondary level. The ten divisions and their sectors are: Ø raw materials and energy production, which includes agriculture, forestry, fishing, and hunting, mining, and utilities; Ø goods production, which includes construction and manufacturing; Ø distribution and transportation of goods, which includes wholesale trade, retail trade, and transportation and warehousing; Ø information; Ø finance, insurance, real estate, and rental and leasing; Ø professional and business services, which includes professional, scientific, and technical services, management companies and enterprises, and administrative and support, and waste management and remediation services; Ø education, health and social services, which includes education and health and social assistance; Ø leisure, accommodation, and food service, which includes arts, entertainment, and recreation, and accommodation and food services; S Corporation Returns, 1998 Figure A Form 1120 Series Returns by Percentage of Filings, Tax Years 1986-1998 Percentage of filings 80 70 60 50 40 30 20 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 Tax year S corporations Ø other services; Ø nature of business not allocable. For information on lower-level groupings (major groups and minor industries), see Internal Revenue Service, Statistics of Income--Corporation Source Book, Publication 1053. The prior industry classification system was known as the Standard Industrial Classification system, and was developed in the late 1930’s by the United States. Over the course of the twentieth century, the American economy underwent a significant shift from a goods-producing economy to a service-producing one. As the economy shifted, new industries emerged. An industry classification system overhaul was needed to account for shifts in the economy. NAICS was designed to accommodate these shifts. S corporation data for Tax Year 1998 are being classified and presented for the first time under this NAICS-based industry classification system. The new industry classifications allow for greater detail All other corporations and the presentation of recently emerged industries, such as in the Information division, which was not distinguished in prior years. At the same time, the new industry classifications do present a problem for longitudinal analysis by industry. Therefore, industry data presented cannot readily be compared to prior years, and such comparisons will not be attempted in this article as the foundations of the classification system have dramatically changed under this new system. For example, in Tax Year 1997, three industrial divisions (services; wholesale and retail trade; and finance, insurance, and real estate) accounted for nearly three-quarters of all S corporations. For Tax Year 1998, the top three industrial divisions (distribution and transportation of goods; professional and business services; and goods production) account for less than 59 percent of all S corporations. SCorporationBasics An S corporation is an incorporated entity that retains the main attributes of the traditional C corporation, such as limited liability, freely transferable ownership, 47 S Corporation Returns, 1998 48 and unlimited life span, but, in exchange for certain limitations, receives the benefits of a flow-through entity for income tax purposes. The election to be treated as an S corporation 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 the double taxation on the corporation’s net income or capital gains. This is unlike a taxable corporation which incurs a tax liability at the corporate level on its net income and capital gains, and then again, 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 a corporation that is eligible to make a Subchapter S election. The tax benefits of an S election are valuable for profitable corporations as well as corporations that report net losses, 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 Submission Processing 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 [4]. The criteria for Tax Year 1998 were that the corporation: Ø be a domestic corporation (an unincorporated association, that is treated as a corporation under Code Section 7701, may elect treatment as an S 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 [5]; Ø have no nonresident alien shareholders; and Ø have only one class of stock. Ineligible corporations were: 48 Ø affiliated group members eligible for inclusion on a consolidated return; Ø insurance companies subject to provisions of Subchapter L of the Internal Revenue Code; Ø Interest-Charge Domestic International Sales Corporations (IC-DISC's) or former Domestic International Sales Corporations (DISC's); Ø corporations eligible to elect the possessions tax credit; and Ø banks or thrift institutions that use the reserve method of accounting for bad debts under Internal Revenue Code section 585. 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 1998, over 90.0 percent of all S corporations filed a calendar year return [6]. ComparisonsofPass-ThroughEntities Over the past few years, S corporations have been compared to other pass-through entity choices by tax professionals to determine which pass-through entity choice provides the most benefit. The focus of this debate has centered on the S corporation election or the limited liability company (LLC). The limited liability company is a hybrid entity combining partnership and corporate characteristics and has advantages over the S corporation election, as there is no limit on the number of owners, and it allows corporate or foreign ownership. Conversely, S corporations are limited to a maximum of 75 shareholders that must be individuals, estates, certain trusts, or exempt organizations but cannot have a nonresident alien shareholder. Additionally, an eligible corporation must be domestic and may have only one class of stock. Despite the advantages of the LLC entity classification, LLC's are generally subject to provisions under subchapter K of the Internal Revenue Code that govern partnerships. This subchapter of the Code is considered by many tax professionals to be complex. Subchapter S of the Internal Revenue Code, however, generally governs S corporations. The simplicity of subchapter S is S Corporation Returns, 1998 considered by many to be an advantage for the small business owner who wants the liability protection of a corporation coupled with one level of tax, as a passthrough entity, without the cumbersome provisions of subchapter K. Shareholders of S corporations may also benefit from lower employment taxes. Wages they receive from the firm are subject to FICA taxes, but profits are generally not subject to self-employment taxes. Active members of unincorporated entities, like LLC's, can be liable for these taxes on their pass-through income, however. Some tax professionals have speculated that, as a pass-through entity choice, S corporation elections will decline in popularity. This speculation is not supported by the data as S corporation return filings continued to increase for Tax Year 1998. More than 310.2 thousand corporations elected subchapter S status for the first time during Tax Year 1998, which includes over 241.2 thousand newly incorporated businesses electing subchapter S treatment out of a total population of nearly 2.6 million. The remaining 68.9 thousand corporations were added to the S corporation population as taxable corporations converted to S corporation status during Tax Year 1998. These statistics are comparable with those for Tax Year 1997 when nearly 2.5 million returns were filed, including 320.8 thousand corporations that elected subchapter S status for the first time in 1997. Of this group, nearly 227.4 thousand newly incorporated businesses elected S corporation status for the first time, and 93.4 thousand converted from taxable corporations to S corporation status. Overall, these statistics show continued increases in the number of businesses electing S corporation status, even though there is a slight decline in the rate of growth from Tax Year 1997 compared with Tax Year 1998. As further evidence of the continued popularity of S corporations as an entity choice, they now comprise 53.4 percent of all Form 1120 series returns filed for Tax Year 1998, up from 52.1 percent for Tax Year 1997. Thus, they continue to be the single most popular corporate entity choice of the Form 1120 series returns. As previously reported in the Statistics of Income Bulletin, there were nearly 1.9 million partnership returns filed for Tax Year 1998 [7]. Included in this figure are 470.7 thousand limited liability company returns, which is an increase of more than 34.8 percent over Tax Year 1997. While the increase in filings of these returns continues, there is a decline in the rate of growth as shown in Figure B. The increase in the number of partnership filings is attributed to limited liability companies as well as limited partnerships. While these two entity choices have experienced increases, general partnerships have been on the decline [8]. These statistics do not include limited liability companies that have filed a Form 1120 or that file as a sole proprietorship a Form 1040 Schedule C. The statistics on S corporation elections and partnership filings do not yet indicate a dramatic shift away from subchapter S elections to other passthrough entity choices. Subsidiaries Tax Year 1998 was the second year that S corporations were allowed to own 100 percent of the stock of an eligible S corporation and elect to treat the Figure B Limited Liability Companies Filing on Form 1065 and Form 1065B for Tax Years 1993-1998 [All figures are estimates based on samples] Tax year Total Total partnership Total number Total limited Percent number of percent of limited liability companies of limited liability partnership change liability percent change companies returns (1) from prior year (2) companies (3) from prior year (4) to total (5) 1993................................................................................................. 1,467,567 1994................................................................................................. 1,493,963 1995................................................................................................. 1,580,900 -1.8 5.8 17,335 47,816 118,559 -175.8 147.9 1.2 3.2 7.5 1996................................................................................................. 1,654,256 1997................................................................................................. 1,758,627 4.6 6.3 221,498 349,054 86.8 57.6 13.4 19.8 1998................................................................................................. 1,855,348 5.5 470,657 34.8 25.4 NOTE: Includes Limited Liability Companies filing on Form 1065, U.S. Partnership Return of Income and Form 1065B, U.S. Return of Income for Electing Large Partnerships. 49 S Corporation Returns, 1998 subsidiary owned as a “qualified subchapter S subsidiary” or QSUB [9]. Tax Year 1997 was the first year statistics were published on such data and just over 1,900 S corporations reported a QSUB election for eligible subsidiaries. These corporations also reported total assets of $53.7 billion and total net income (less deficit) of $2.5 billion. For Tax Year 1998, nearly 3,100 S corporations reported such an election, a 61.7-percent increase over the prior period. Total assets reported by these S corporations were $109.3 billion, and total net income (less deficit) was $5.6 billion for Tax Year 1998. Many of the S corporations that made an election to treat a subsidiary as a qualified subsidiary made the election for multiple subsidiaries owned. Figure C shows the number of S corporations reporting a QSUB election, total assets, and total net income (less deficit) by industrial division for Tax Year 1998. FinancialDataHighlights 50 Figure D displays total net income (less deficit) for each industrial sector. Total net income (less deficit) for S corporations includes net income (less deficit) from trade or business, real estate rental income (less deficit), net income (less deficit) from other rental activity, and portfolio income (less loss) distributed to shareholders [10]. Table 1 presents data for all S corporations and then groups the data by industry divisions and by industry sectors. Total net income (less deficit) increased to $181.8 billion for Tax Year 1998, an 18.8-percent increase over the $153.1 billion reported for Tax Year 1997. Net income (less deficit) from a trade or business comprises the single largest component of total net income (less deficit). Despite the reported increase for this item, this component of total net income (less deficit) declined slightly as it accounted for 68.7 percent of total net income (less deficit), as compared to Tax Year 1997 when it accounted for 73.0 percent of total net income (less deficit). The slight decline as a percentage of total net income (less deficit) is due to an increase in portfolio income (less deficit). Portfolio income (less deficit) consists of dividend income, interest income, royalty income, net short-term capital gain (less loss), net long-term capital gain (less loss), and other portfolio income (less loss). These items increased by 39.9 percent for Tax Year 1998. The Taxpayer Relief Act of 1997 reduced the tax rates on net longterm capital gains, and the impact of those lower rates can be seen in the increases reported for net long-term capital gains (less loss) [11]. For Tax Year 1997, S corporations reported net long-term capital gain (less loss) totaling $23.5 billion, an increase of 43.4 percent over the prior year. For Tax Year 1998, net long-term gain (less loss) was nearly $38.0 billion, an increase of 61.5 percent over Tax Year 1997. Figure C S Corporation Filings with Qualified Subchapter S Subsidiaries, by Industrial Division, Tax Year 1998 [All figures are estimates based on samples--money amounts are in thousands of dollars] Industrial division Number of Total Total net income returns assets (less deficit) (1) (2) All industries…………….............................................................................................................................3,073 (3) 5,624,562 Raw materials and energy production............................................................................................................................. 91 3,514,770 67,255 Goods production…………….............................................................................................................................528 24,893,864 2,005,525 Distribution and transportation of goods............................................................................................................................. 821 13,591,363 851,969 Information……………………..............................................................................................................................288 5,516,123 551,601 Finance, insurance, real estate, and rental and leasing............................................................................................................................. 283 22,278,130 1,049,089 Professional and business services............................................................................................................................. 823 Education, health, and social assistance............................................................................................................................. 25 36,860,754 846,695 385,110 8,489 Leisure, accommodation, and food services............................................................................................................................. 163 1,934,455 243,939 Other services…………………............................................................................................................................... *51 *308,082 *15,504 * Estimate should be used with caution because of the small number of returns on which it is based. NOTE: Detail may not add to totals because of rounding. 50 109,282,651 S Corporation Returns, 1998 Figure D S Corporations: Total Net Income (Less Deficit), by Industrial Sector, Tax Year 1998 [All figures are estimates based on samples--money amounts are in thousands of dollars] All Item Industries (1) Agriculture, forestry, Mining fishing, and hunting (2) Utilities (3) (4) Total net income (less deficit)...................................................................... 181,788,303 1,034,457 2,416,272 Net income (less deficit) from a trade or business...................................................................... 124,859,425 297,381 1,167,921 Portfolio income (less deficit) distributed to shareholders...................................................................... 51,465,087 556,411 1,231,779 Dividend income...................................................................... 1,612,865 26,011 71,014 Interest income...................................................................... 10,629,968 249,430 202,279 Royalty income...................................................................... 619,003 25,284 90,850 Net short-term capital gain (less loss)...................................................................... 507,233 -5,654 1,764 Net long-term capital gain (less loss)...................................................................... 37,953,826 253,487 864,972 Other portfolio income (net)...................................................................... 142,192 7,852 900 Real estate rental net income (less deficit)...................................................................... 4,546,215 157,285 11,305 Net income (less deficit) from other rental activity...................................................................... 917,576 23,380 5,267 Item 513,875 102,254 412,250 869 52,645 --192 358,929 -*-786 *157 Wholesale and retail trade Wholesale trade Retail trade Wholesale and retail trade (7) (8) (9) not allocable (10) Total net income (less deficit)...................................................................... 38,203,962 20,283,199 17,905,559 Net income (less deficit) from a trade or business...................................................................... 29,540,808 15,984,289 13,546,101 Portfolio income (less deficit) distributed to shareholders...................................................................... 8,163,305 4,064,069 4,095,128 Dividend income...................................................................... 213,780 112,682 101,065 Interest income...................................................................... 1,930,422 902,220 1,024,559 Royalty income...................................................................... 134,616 86,968 47,649 Net short-term capital gain (less loss)...................................................................... 23,495 -2,447 25,801 Net long-term capital gain (less loss)...................................................................... 5,851,870 2,958,359 2,893,221 Other portfolio income (net)...................................................................... 9,121 6,287 2,834 Real estate rental net income (less deficit)...................................................................... 357,099 159,513 196,838 Net income (less deficit) from other rental activity...................................................................... 142,750 75,329 67,491 Item Item Manufacturing (5) (6) 21,257,116 18,136,701 2,915,819 121,778 1,267,598 5,758 49,328 1,463,443 7,913 175,529 29,067 35,567,911 27,556,943 7,799,415 183,232 1,349,308 68,151 -11,260 6,207,247 2,737 137,236 74,317 Transportation and warehousing Information (11) (12) 15,204 10,418 4,108 34 3,643 -*142 290 -*748 -70 3,562,340 3,018,368 457,268 25,851 214,523 719 19,957 194,812 1,407 45,021 41,683 5,465,193 2,774,160 2,628,957 65,654 340,512 15,872 -49,504 2,248,352 8,071 53,534 8,542 Administrative and support and waste management Educational services Finance and Real estate and rental and Professional, scientific, and technical Management of insurance leasing services companies (13) (14) (15) Total net income (less deficit)...................................................................... 11,856,976 15,161,193 20,294,093 Net income (less deficit) from a trade or business...................................................................... 5,841,795 4,001,462 14,635,028 Portfolio income (less deficit) distributed to shareholders...................................................................... 6,003,496 7,252,391 5,598,455 Dividend income...................................................................... 296,915 182,528 134,996 Interest income...................................................................... 1,414,139 1,390,014 745,118 Royalty income...................................................................... 7,512 59,055 45,320 Net short-term capital gain (less loss)...................................................................... 455,884 74,545 49,918 Net long-term capital gain (less loss)...................................................................... 3,781,797 5,513,194 4,622,145 Other portfolio income (net)...................................................................... 47,248 33,056 958 Real estate rental net income (less deficit)...................................................................... 5,903 3,369,296 64,142 Net income (less deficit) from other rental activity...................................................................... 5,782 538,044 -3,532 Construction (16) and remediation services (17) (18) 2,685,133 1,420,103 1,285,734 186,578 329,809 1,880 -64,268 829,872 1,863 -20,087 -617 8,138,659 4,130,880 3,993,383 15,913 285,422 *36,335 -21,074 3,676,786 1 6,954 7,442 666,602 556,059 107,522 2,958 44,707 *4,075 -89 55,872 -2,909 111 Health care and social Arts, entertainment, Accommodation and food Other Nature of business assistance (19) and recreation (20) services (21) services (22) not allocable (23) 3,624,885 2,811,441 716,127 28,536 350,075 844 4,067 330,689 *1,916 71,257 26,060 3,733,930 2,755,706 926,889 18,140 114,427 *5,799 -2,202 787,083 *3,641 47,229 4,107 -242,709 -364,662 119,165 *1,758 2,341 --427 *115,493 -*2,789 -- Total net income (less deficit).......................................................................................................... 5,988,278 1,860,136 Net income (less deficit) from a trade or business.......................................................................................................... 5,418,254 1,058,824 Portfolio income (less deficit) distributed to shareholders...................................................................... 540,551 756,172 Dividend income..........................................................................................................15,959 20,395 Interest income..........................................................................................................179,858 167,345 Royalty income.......................................................................................................... -116,933 Net short-term capital gain (less loss).......................................................................................................... -10,360 -6,696 Net long-term capital gain (less loss).......................................................................................................... 355,092 442,692 Other portfolio income (net).......................................................................................................... *2 15,503 Real estate rental net income (less deficit).......................................................................................................... 25,454 34,144 Net income (less deficit) from other rental activity.......................................................................................................... 4,019 10,996 *Estimate should be used with caution because of the small number of sample returns on which it is based. NOTE: Detail may not add to totals because of rounding. 51 S Corporation Returns, 1998 Four industrial divisions earned over 86 percent of total net income (less deficit) for Tax Year 1998. Goods production, which includes construction and manufacturing, reported total net income (less deficit) of $56.8 billion. Distribution and transportation of goods, which includes wholesale and retail trade and transportation and warehousing, reported $41.8 billion; professional and business services reported $31.1 billion, and finance, insurance, real estate, and rental and leasing reported $27.0 billion. Table 2 presents data for S corporations that reported positive total net income, by industrial division and industrial sector. These corporations reported an increase in positive total net income for Tax Year 1998 of nearly $31.9 billion, a 16.6-percent increase over Tax Year 1997. Thus, 64.5 percent of all S corporations reported positive total net income as compared to 63.4 percent for Tax Year 1997. Net income (less deficit) from a trade or business was $166.8 billion, up 10.3 percent from Tax Year 1997 when $151.3 billion were reported. Portfolio income (less loss) was up 43.0 percent, largely due to increases in the net long-term capital gain (less loss). S corporations reported an increase in total assets of 11.3 percent to nearly $1.5 trillion for Tax Year 1998 (Table 3). The two largest categories are net depreciable assets, which accounted for 23.4 percent of total assets, and notes and accounts receivable, which accounted for 21.4 percent of the total for all S corporations. Overall, asset categories with the largest percentage increase were investments in government obligations, which had a 49.8percent increase to $26.5 billion; tax-exempt securities, which reported a 36.9-percent increase to $8.1 billion, and other investments, which reported a 24.8percent increase to $138.3 billion. More than 85 percent of the total assets were held in four industrial divisions (Figure E). Goods production held 28.1 percent, being the largest percentage of total assets, with $408.3 billion. Distribution and transportation of goods held 26.8 percent of total assets, with $389.7 billion. Finance, insurance, real estate, and rental and Figure E 52 S Corporation Total Assets, by Industrial Division, Tax Year 1998 All other ¹ 15% Goods production 28% Professional and business services 12% $1.5 Trillion Finance, insurance, real estate, and rental and leasing 18% Distribution and transportation of goods 27% ¹ All other includes raw materials and energy production; information; education, health, and social assistance; leisure, accommodation, and food services; other services; and nature of business not allocable. 52 S Corporation Returns, 1998 leasing held a total of $267.9 billion. The fourth largest industrial division by size of total assets for Tax Year 1998 is professional and business services, which held $171.4 billion in total assets. shareholders. For Tax Year 1998, there were 715 S corporations with more than 35 shareholders, which had 34,319 shareholders. This is up from Tax Year 1997 when 600 corporations with more than 35 shareholders had nearly 25,751 shareholders. RentalRealEstateNetIncome Data on rental real estate net income as reported on Form 8825, Rental Real Estate Income and Expenses of a Partnership or an S Corporation, is shown in Table 4. The number of S corporation returns reporting Rental Real Estate Income on Form 8825 increased by more than 8.1 percent to over 222.1 thousand and reported net rental real estate income (less deficit) of $4.5 billion for Tax Year 1998, an increase of 18.0 percent. Despite the advent of a new industry classification system, NAICS, the sector for real estate and rental and leasing continues to dominate these figures. The real estate group reported 73.2 percent of net rental income (less deficit) for all S corporations. This same group also represented over 71.5 percent of all returns reporting income on Form 8825. Other activities related to rental real estate and reported on this form are net gain from sales of business property, which reported a 23.8-percent increase to $109.0 million. This increase was due not only to an increase in gains but also from a decrease in the losses reported by the sales of business property as well. Losses for Tax Year 1997 were $5.5 million, while losses reported for Tax Year 1998 were $4.8 million. Net income (less deficit) from partnerships and fiduciaries reported a slight decline to $490 million from $512 million between Tax Years 1997 and 1998. Taxes Data by Number of Shareholders Figure F S corporations continue to be owned by 10 or fewer shareholders despite changes in the Tax Code to ease restrictions on the limitation to the number of shareholders [12]. Nearly all (99.0 percent) S corporations reported having 10 or fewer shareholders (Table 5). S corporations reporting more than 10 shareholders and fewer than 31 shareholders decreased from 20,369 in Tax Year 1997 to 18,000 in Tax Year 1998, yet S corporations with more than 30 shareholders increased from over 1,200 to nearly 1,400 (or 10.5 percent). Nearly all new S corporations (99.9 percent) reported 10 or fewer While most S corporations generally do not pay income tax, less than half of 1 percent reported some Federal income tax liability for Tax Year 1998, and the number of S corporations reporting such a liability is growing. An S corporation can, generally, be subject to just four types of Federal income tax. The most common tax reported by S corporations is the “built-in gains” tax. Over 82.0 percent, or $393 million, of all Federal income tax reported by S corporations for Tax Year 1998 was from the built-in gains tax. The reported tax liability for this item increased by 107.0 percent over Tax Year 1997 (Figure F). The built-in gains tax can only apply to an S corporation that has not 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 the corporation was subject to the rules of a taxable corporation [13]. Other taxes that can result in a Federal income tax liability for an S corporation are the excess net passive income tax, the LIFO recapture tax (included S Corporation Taxes, Tax Years 1997 and 1998 [All figures are estimates based on samples--money amounts are in thousands of dollars] Items 1997 1998 (1) (2) Percent change Total tax....................................................................................... 256,352 479,411 (3) 87.0 Built-in gains tax....................................................................................... 190,016 393,322 107.0 Excess net passive income tax....................................................................................... 16,494 17,466 5.9 Adjustments to tax....................................................................................... 46,393 66,594 43.5 Investment credit recapture tax....................................................................................... *1,042 *755 *-27.5 Income tax adjustment....................................................................................... *2,407 *1,275 *-47.0 *Estimate should be used with caution because of the small number of sample returns on which it is based. 53 S Corporation Returns, 1998 54 in “Adjustments to tax” in Figure E), and the recapture of prior year’s investment credit. All of these apply only to corporations that had operated as taxable corporations before their S elections. The excess net passive income tax is imposed on S corporations that were previously taxable corporations and that have subchapter C earnings and profits if their passive investment income exceeds 25 percent of gross receipts [14]. 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, 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 can be liable for recapture attributable to credits allowed in years before the corporation was an S corporation. Figure E shows tax liability reported by S corporations for Tax Years 1997 and 1998. 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. Largely due to the “built-in gains” tax, S corporations reported an increase in total tax liability of 87.0 percent to $479.4 million for Tax Year 1998. Total net income (less deficit) reported by all S corporations for Tax Year 1998 was $181.8 billion, and total tax liability was $479.4 million. Tax liability was reported by more than 10,400 S corporations for Tax Year 1998, an increase of more than 2,500 over Tax Year 1997. While total tax liability has increased, there remain fewer than half of 1 percent (0.40 percent) of all S corporations reporting a Federal income tax liability. Conclusion 54 S corporations continued on a trend of steady growth as the number of filings increased to nearly 2.6 million. S corporations also continued to be the single most popular corporate entity filing the Form 1120 series as 53.4 percent of all corporate returns were S corporations. Total net income (less deficit) increased by 18.8 percent to $181.8 billion for Tax Year 1998. Net income (less deficit) from a trade or business is the largest component of total net income (less deficit) as it accounted for 68.7 percent of the total, or $124.9 billion. Portfolio income (less loss) increased by nearly 40 percent to $51.5 billion, most of this increase due to net long-term capital gains, which grew to nearly $38.0 billion for Tax Year 1998. Included in total net income (less deficit) is rental real estate net income (less deficit), which was reported at $4.5 billion, an increase of 18.0 percent. The number of returns filing this type of income was up by more than 8.1 percent, or 222.2 thousand S corporations. Total assets reported by S corporations amounted to nearly $1.5 trillion, with four industrial divisions holding more than 85 percent of total assets reported. Data reported for Tax Year 1998 are being classified for the first time using the newly adopted NAICS industry classification system. Longitudinal comparisons by industry are impeded due to this new system. Tax professionals have compared S corporations to other pass-through entity types, and several have speculated that the LLC would take over as the dominant pass-through entity choice. Data provided thus far do not support this claim. Nearly all (99.0 percent) S corporations reported 10 or fewer shareholders despite changes in the tax law that lessened restrictions on the limitations imposed. New S corporations were even more likely to have 10 or fewer shareholders, as 99.9 percent of all new S corporations reported as such. Despite increases in the number of returns reporting a Federal tax liability, as in prior years, less than half of 1 percent of all S corporations reported such a liability. The most common tax liability reported is the built-in gains tax, which increased by 107.0 percent over Tax Year 1997. DataSourcesandLimitations The statistics for Tax Year 1998 are based on a sample of S corporation income tax returns with accounting periods ending July 1998 through June 1999 that posted to the Internal Revenue Service Business Master File between July 1998 and the end of June 2000. S Corporation Returns, 1998 The estimates in this article were based on a stratified probability sample of 41,434 S corporation returns drawn from a total population of 2,716,507 returns. The stratification was based on combinations of total assets and ordinary 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 40,532 active S corporation returns. Based on this count, the number of active S corporations for Tax Year 1998 was estimated to be 2,588,088. 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 detailed information on the impact of these legislative acts on S corporations, see the following articles: 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. For more information on the impact of the Small Business Job Protection Act of 1996, see Wittman, Susan, “S Corporation Returns, 1997,” Statistics of Income Bulletin, Spring 2000, Volume 19, 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. Limited liability companies that choose to be taxed as a corporation can file Form 1120; however, only an “LLC” designation in the name can identify such entities as the form is not designed to clearly identify these unincorporated associations. The number of returns with an “LLC” designation in the Statistics of Income corporate file is unpublished and small. Figure G Coefficients of Variation for Number of Returns, Number of Shareholders, Total Receipts, Dividends, and Interest, by Industrial Division, Tax Year 1998 Industrial division Number of Number of Total Dividend Interest returns shareholders receipts income income (1) (2) (3) (4) (5) Percentages 0.68 3.89 1.84 Raw materials and energy production.................................................................................................. 4.38 5.81 Goods production.................................................................................................. 1.71 2.22 All industries ¹.................................................................................................. 0.25 0.80 4.21 0.99 6.66 4.20 4.49 1.95 Distribution and transportation of goods.................................................................................................. 1.58 2.02 1.25 9.25 3.02 Information.................................................................................................. 7.02 5.30 12.07 5.29 Finance, insurance, real estate, and rental and leasing.................................................................................................. 1.73 2.68 4.38 9.59 5.35 Professional and business services.................................................................................................. 1.94 2.36 Education, health, and social assistance.................................................................................................. 3.94 6.18 2.81 5.54 9.53 20.46 6.42 11.52 Leisure, accommodation, and food services.................................................................................................. 2.71 3.59 2.55 12.38 5.45 Other services.................................................................................................. 3.92 4.48 12.79 9.48 8.21 4.72 ¹ Includes returns not allocable by industrial division. 55 S Corporation Returns, 1998 [3] North American Industry Classification System United States, 1997, Executive Office of the President, Office of Management and Budget. [4] Provisions exist to allow for late-filed election to be considered as timely made. See Revenue Procedure 97-40 for extended filings. For further detail on filing an S election, see Internal Revenue Service, Internal Revenue Code, Subchapter S [Section 1362(a), (b)]. [5] Eligible trusts are defined in the Internal Revenue Code 1361(c)(2)(A); eligible trusts include those that are treated as owned by an individual who is a citizen or resident of the United States. Eligible exempt organizations are defined in Internal Revenue Code 401(a); these organizations include qualified pension plans, profit-sharing plans, and stock bonus plans, or eligible exempt organizations defined in Internal Revenue Code 501(c)(3), which includes certain tax-exempted organizations. 56 [6] 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. [7] For more information on partnerships, see Zempel, Alan, “Partnership Returns, 1998,” Statistics of Income Bulletin, Fall 2000, Volume 20, Number 2. [8] For more information on partnerships, limited liability companies, and general partnerships, see Zempel, Alan, “Partnership Returns, 1998,” Statistics of Income Bulletin, Fall 2000, Volume 20, Number 2. [9] For more information on the impact of the Small Business Job Protection Act of 1996, see Wittman, Susan, “S Corporation Returns, 1997,” Statistics of Income Bulletin, Spring 2000, Volume 19, Number 4. [10] Total net income (less deficit) as specified here includes the following income items: net income (less deficit) from trade or business, real estate rental income (less deficit), net income (less deficit) from other rental activity, and portfolio income (less loss) distributed to shareholders. On Form 1120S, there are some deduction items to be drawn against the income items listed above, as well as the reduction in income reported due to the built-in gains tax. After these deductions and adjustments are made, total net income (less deficit) is $169.8 billion. [11] Ibid. (see [9]) [12] Ibid. (see [9]) [13] 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. [14] “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, Spring 2001, Publication 1136 (Revised 5-01). 56 S Corporation Returns, 1998 Table 1.--S Corporations: Total Income and Deductions, Portfolio Income, Rental Income and Total Net Income, by Industrial Division, Sector, and Major Group [All figures are estimates based on samples--money amounts are in thousands of dollars] Raw materials and energy production Agriculture, forestry, fishing, and hunting All Item industries Support Total Forestry Total activities and Agriculture and fishing, production logging hunting, Mining Utilities (3) (4) (5) 69,418 44,943 7,559 16,915 (7) 15,479 (8) 2,124 173,271 118,188 18,201 36,882 38,765 5,723 Total receipts ¹........................................................................................... 3,061,133,169 66,762,681 48,369,315 30,590,979 5,643,933 12,134,403 15,672,706 2,720,659 Business receipts........................................................................................... 3,004,118,934 61,579,629 Interest on Government obligations: 44,385,790 27,039,066 5,589,872 11,756,852 14,577,947 2,615,892 State and local........................................................................................... 989,514 36,218 18,950 Net gain, noncapital assets........................................................................................... 7,072,292 582,378 262,262 16,495 211,195 *1,683 6,519 772 44,549 16,654 316,547 614 3,568 and trapping (1) (2) Number of returns........................................................................................... 2,588,088 87,021 Number of shareholders........................................................................................... 4,839,618 217,758 (6) Income and deductions from a trade or business: Other receipts........................................................................................... 48,952,430 4,564,456 3,702,313 3,324,223 45,860 332,230 761,557 100,585 Total deductions........................................................................................... 2,935,284,231 65,158,906 48,052,984 30,739,826 5,627,344 11,685,813 14,488,131 2,617,792 Cost of goods sold........................................................................................... 1,933,927,048 34,546,825 25,146,324 Compensation of officers........................................................................................... 118,740,561 1,524,380 1,016,483 14,404,021 536,082 3,385,296 155,284 7,357,008 325,117 7,602,023 460,217 1,798,478 47,680 Salaries and wages........................................................................................... 304,673,213 5,057,703 Repairs........................................................................................... 18,852,368 1,485,803 Bad debts........................................................................................... 6,287,840 83,495 3,909,015 1,223,875 48,852 2,563,363 760,185 34,932 383,631 158,865 7,574 962,021 304,826 6,346 975,978 246,440 29,146 172,710 15,489 5,497 Rent paid on business property........................................................................................... 68,307,705 1,930,744 1,564,797 Taxes paid........................................................................................... 62,621,621 1,566,311 944,203 1,308,754 639,286 53,133 106,420 202,910 198,498 288,910 567,336 77,037 54,772 Interest paid........................................................................................... 37,153,707 1,597,470 Amortization........................................................................................... 3,659,561 142,729 1,061,877 74,856 773,820 59,312 121,799 2,390 166,258 13,154 441,461 58,798 94,131 9,076 Depreciation........................................................................................... 51,485,900 3,161,226 Depletion........................................................................................... 495,092 287,659 2,138,434 136,960 1,442,651 *7,502 286,727 *128,148 409,056 *1,310 887,713 146,424 135,079 4,275 Advertising........................................................................................... 29,455,958 220,120 Pension, profit-sharing, stock 193,620 98,354 3,872 91,393 23,334 3,166 bonus, and annuity plans........................................................................................... 10,704,288 125,551 67,831 Employee benefit programs........................................................................................... 22,010,877 441,061 251,815 38,800 173,629 8,509 24,838 20,523 53,348 49,597 173,636 8,123 15,610 Net loss, noncapital assets........................................................................................... 641,708 36,901 4,903 Other deductions........................................................................................... 266,266,785 12,950,928 10,269,139 4,589 7,894,547 275 800,585 39 1,574,007 31,998 2,505,120 -176,669 Total receipts less total deductions........................................................................................... 125,848,938 1,603,774 316,332 -148,848 16,589 448,590 1,184,575 102,868 Net income (less deficit) from a trade or business........................................................................................... 124,859,425 1,567,556 297,381 -165,343 14,906 447,818 1,167,921 102,254 2,698,307 2,400,926 1,745,535 1,910,877 208,341 193,436 744,431 296,613 1,808,203 640,282 225,038 122,785 Portfolio income (less deficit) distributed to shareholders........................................................................................... 51,465,087 2,200,440 556,411 Net income........................................................................................... 171,096,577 4,731,549 Deficit........................................................................................... 46,237,152 3,163,993 360,014 68,103 128,294 1,231,779 412,250 Dividend income........................................................................................... 1,612,865 97,894 Interest income........................................................................................... 10,629,968 504,354 26,011 249,430 15,310 187,474 1,718 25,277 8,983 36,679 71,014 202,279 869 52,645 Royalty income........................................................................................... 619,003 116,134 Net short-term capital gain (less loss)........................................................................................... 507,233 -4,082 25,284 24,656 628 -- 90,850 -- -5,654 222 -2,465 *-3,411 1,764 -192 253,487 124,797 42,630 86,060 864,972 358,929 Other portfolio income (net)........................................................................................... 142,192 8,752 7,852 7,555 314 -17 900 -- 157,285 162,325 147,449 152,209 2,307 2,379 7,529 7,737 11,305 25,967 -786 637 5,040 4,760 72 209 14,662 1,424 Net long-term capital gain (less loss)........................................................................................... 37,953,826 1,477,388 Real estate rental net income (less deficit)........................................................................................... 4,546,215 167,804 Net income........................................................................................... 6,673,561 188,929 Deficit........................................................................................... 2,127,346 21,126 Net income (less deficit) from other rental activity........................................................................................... 917,576 28,804 23,380 16,654 849 *5,876 5,267 *157 25,478 *2,099 18,525 *1,871 881 32 *6,072 196 7,237 *1,970 *157 -- Total net income (less deficit)........................................................................................... 181,788,303 3,964,603 1,034,457 Net income........................................................................................... 223,972,910 6,851,195 3,233,710 358,775 2,122,403 86,165 263,075 589,517 848,232 2,416,272 2,999,515 513,875 617,970 1,763,628 176,910 258,716 583,243 104,095 Net income........................................................................................... 1,246,257 32,872 Deficit........................................................................................... 328,681 4,069 Deficit........................................................................................... 42,184,607 2,886,592 2,199,254 Footnotes at end of table. 57 S Corporation Returns, 1998 Table 1.--S Corporations: Total Income and Deductions, Portfolio Income, Rental Income and Total Net Income, by Industrial Division, Sector, and Major Group--Continued [All figures are estimates based on samples--money amounts are in thousands of dollars] Goods production Item Total Total Construction Building, Special Manufacturing developing, Heavy trade and general construction contractors Beverage Total Food and tobacco manufacturing contracting (9) (10) (11) product manufacturing (13) (14) 129,539 12,274 163,717 146,617 8,296 1,497 239,117 22,683 254,355 337,004 30,010 8,001 180,011,911 52,497,391 163,392,020 488,236,031 52,269,759 7,786,403 177,971,064 51,632,072 162,288,974 483,140,763 51,629,162 7,668,447 Number of returns........................................................................................... 452,147 305,531 Number of shareholders........................................................................................... 853,159 516,155 (12) (15) (16) Income and deductions from a trade or business: Total receipts ¹........................................................................................... 884,137,352 395,901,321 Business receipts........................................................................................... 875,032,873 391,892,110 Interest on Government obligations: State and local........................................................................................... 240,252 96,099 57,699 14,193 24,207 144,154 10,762 2,496 Net gain, noncapital assets........................................................................................... 1,538,686 582,571 154,661 Other receipts........................................................................................... 7,325,541 3,330,541 1,828,486 235,642 615,485 192,268 886,570 956,115 3,995,000 83,416 546,418 10,883 104,577 173,516,974 147,517,792 50,078,521 39,305,498 154,073,027 106,921,648 460,534,934 333,454,799 50,194,548 38,508,861 7,308,845 4,508,103 Compensation of officers........................................................................................... 27,496,128 12,488,695 4,109,646 Salaries and wages........................................................................................... 53,909,049 18,828,533 5,143,323 1,236,642 2,067,650 7,142,407 11,617,561 15,007,433 35,080,516 773,591 3,154,780 141,823 778,868 404,064 221,730 333,069 56,288 851,187 239,224 2,317,337 834,640 267,007 47,394 64,878 7,402 Rent paid on business property........................................................................................... 11,377,185 5,238,607 1,094,863 Taxes paid........................................................................................... 16,516,673 6,779,024 1,816,947 1,355,059 798,589 2,788,685 4,163,488 6,138,578 9,737,649 577,574 656,664 88,854 269,928 Total deductions........................................................................................... 838,203,457 377,668,522 Cost of goods sold........................................................................................... 627,199,736 293,744,937 Repairs........................................................................................... 3,905,656 1,588,319 Bad debts........................................................................................... 1,351,882 517,242 58 Interest paid........................................................................................... 8,738,732 3,146,720 Amortization........................................................................................... 587,322 119,764 1,713,049 71,714 384,005 7,411 1,049,666 40,639 5,592,012 467,557 464,042 37,446 105,378 22,453 Depreciation........................................................................................... 17,419,654 5,575,526 Depletion........................................................................................... 180,031 26,957 1,075,347 5,148 1,519,941 19,891 2,980,238 *1,918 11,844,128 153,074 1,016,694 -- 275,446 1,001 Advertising........................................................................................... 5,810,256 1,212,697 464,403 Pension, profit-sharing, stock bonus, and annuity plans........................................................................................... 3,296,223 1,223,097 317,861 49,394 698,900 4,597,559 959,786 389,324 276,102 629,134 2,073,126 179,655 29,971 Employee benefit programs........................................................................................... 8,422,918 3,287,721 692,336 Net loss, noncapital assets........................................................................................... 105,247 21,623 6,619 371,792 5,631 2,223,593 9,373 5,135,196 83,624 422,040 3,742 95,483 *523 8,862,133 2,291,559 12,715,366 28,017,706 3,125,273 529,410 Total receipts less total deductions........................................................................................... 45,933,895 18,232,799 6,494,936 Other deductions........................................................................................... 51,886,765 23,869,058 2,418,870 9,318,993 27,701,096 2,075,211 477,558 Net income (less deficit) from a trade or business........................................................................................... 45,693,643 18,136,701 6,437,237 2,404,678 9,294,785 27,556,943 2,064,448 475,062 8,876,967 2,439,730 2,698,619 293,942 10,458,409 1,163,624 33,057,590 5,500,647 2,374,839 310,391 575,415 100,353 distributed to shareholders........................................................................................... 10,715,234 2,915,819 1,774,397 Dividend income........................................................................................... 305,010 121,778 49,965 374,066 38,934 767,356 32,878 7,799,415 183,232 323,576 16,849 43,228 2,549 Net income........................................................................................... 55,091,586 22,033,996 Deficit........................................................................................... 9,397,942 3,897,296 Portfolio income (less deficit) Interest income........................................................................................... 2,616,906 1,267,598 Royalty income........................................................................................... 73,909 5,758 739,298 407 223,377 3,200 304,923 *2,151 1,349,308 68,151 113,481 2,131 33,926 1 Net short-term capital gain (less loss)........................................................................................... 38,068 49,328 43,504 3,909 1,915 -11,260 -1,669 -1,391 Net long-term capital gain (less loss)........................................................................................... 7,670,690 1,463,443 935,156 103,215 425,072 6,207,247 192,612 8,118 Other portfolio income (net)........................................................................................... 10,651 7,913 6,067 *1,431 416 2,737 172 25 Real estate rental net income (less deficit)........................................................................................... 312,765 175,529 Net income........................................................................................... 431,470 276,699 134,741 230,130 23,187 23,918 17,601 22,650 137,236 154,771 13,074 14,071 6,702 7,019 Deficit........................................................................................... 118,705 101,170 95,389 731 5,049 17,535 997 317 Net income (less deficit) from other rental activity........................................................................................... 103,384 29,067 10,111 14,316 4,640 74,317 2,119 *5,881 11,588 *1,477 15,933 1,616 4,736 96 79,092 4,775 2,228 109 *6,743 862 Total net income (less deficit)........................................................................................... 56,825,026 21,257,116 8,356,486 Net income........................................................................................... 65,442,311 25,019,340 10,785,028 2,816,247 3,053,432 10,084,382 11,180,879 35,567,911 40,422,970 2,403,218 2,694,253 530,874 626,628 237,185 1,096,498 4,855,060 291,036 95,754 Net income........................................................................................... 111,348 32,256 Deficit........................................................................................... 7,964 3,189 Deficit........................................................................................... 8,617,284 3,762,225 Footnotes at end of table. 58 2,428,542 S Corporation Returns, 1998 Table 1.--S Corporations: Total Income and Deductions, Portfolio Income, Rental Income and Total Net Income, by Industrial Division, Sector, and Major Group--Continued [All figures are estimates based on samples--money amounts are in thousands of dollars] Goods production--continued Textile mills Item Leather and Manufacturing--continued Wood Printing Petroleum and textile Apparel allied product Paper and related and coal Chemical product manufacturing product manufacturing manufacturing support products manufacturing activities manufacturing (20) (21) (22) (23) mills (17) manufacturing (18) (19) Number of returns........................................................................................... 3,535 8,197 (24) 1,126 6,326 1,568 18,365 624 4,633 1,863 14,565 5,577 31,924 1,019 15,160 2,330,300 26,628,855 16,984,622 28,457,999 4,382,189 16,228,772 2,329,340 26,357,318 16,833,858 28,222,618 4,282,063 15,942,628 Number of shareholders........................................................................................... 8,622 15,326 Income and deductions from a trade or business: Total receipts ¹........................................................................................... 18,039,541 25,865,697 Business receipts........................................................................................... 17,675,860 25,489,970 Interest on Government obligations: State and local........................................................................................... 4,526 4,401 *627 3,493 11,952 5,839 *387 4,336 303 30 43,328 224,717 43,102 95,710 75,954 153,588 34,924 64,815 36,309 245,500 2,241,356 1,572,400 25,415,854 20,221,821 16,429,767 12,092,293 26,948,148 16,674,251 4,153,836 3,226,610 15,137,146 9,648,705 Compensation of officers........................................................................................... 534,733 800,020 80,173 Salaries and wages........................................................................................... 1,027,312 2,185,648 206,268 497,350 1,230,687 418,800 1,221,152 1,350,488 2,809,918 89,036 239,554 539,017 1,516,041 6,022 5,873 126,796 29,955 91,762 26,836 197,460 86,362 42,575 13,057 118,265 44,499 Rent paid on business property........................................................................................... 159,863 377,455 30,104 Taxes paid........................................................................................... 306,193 483,803 47,286 188,911 490,011 240,116 318,601 675,325 748,630 45,633 62,108 242,644 314,642 Interest paid........................................................................................... 208,440 401,909 Amortization........................................................................................... 8,090 9,993 41,525 865 338,722 18,167 261,057 14,926 396,629 42,132 55,020 5,127 191,919 40,816 Depreciation........................................................................................... 354,722 301,217 Depletion........................................................................................... --- 27,809 -- 640,844 137,462 638,156 *327 1,043,556 -- 115,869 1,049 409,649 1,264 Advertising........................................................................................... 66,638 246,253 39,638 Pension, profit-sharing, stock bonus, and annuity plans........................................................................................... 47,869 62,117 4,194 124,589 52,779 253,622 19,608 265,388 95,083 80,972 129,163 13,501 76,197 Employee benefit programs........................................................................................... 140,367 178,036 27,732 Net loss, noncapital assets........................................................................................... 1,199 9,907 3 222,422 7,032 162,343 1,808 313,688 26,951 30,003 1 170,840 1,159 151,464 1,046,002 807,840 2,199,972 195,087 1,556,102 Total receipts less total deductions........................................................................................... 625,910 705,031 88,945 1,213,001 554,855 1,509,851 228,353 1,091,627 Net gain, noncapital assets........................................................................................... 14,694 36,393 Other receipts........................................................................................... 344,461 334,932 Total deductions........................................................................................... 17,413,631 25,160,665 Cost of goods sold........................................................................................... 13,717,604 18,448,548 Repairs........................................................................................... 63,518 55,402 Bad debts........................................................................................... 64,405 42,599 Other deductions........................................................................................... 712,678 1,557,760 Net income (less deficit) from a trade or business........................................................................................... 621,385 700,631 88,318 1,209,508 542,903 1,504,012 227,966 1,087,291 137,400 49,083 1,557,661 348,153 915,470 372,568 1,895,057 391,045 275,918 *47,952 1,334,063 246,772 distributed to shareholders........................................................................................... 110,345 321,942 9,184 Dividend income........................................................................................... 5,160 8,771 2,399 187,223 3,248 245,078 14,636 631,462 8,489 67,059 1,090 1,696,699 16,261 Net income........................................................................................... 920,716 1,134,409 Deficit........................................................................................... 299,332 433,778 Portfolio income (less deficit) Interest income........................................................................................... 50,506 41,883 Royalty income........................................................................................... 1,650 12,324 5,363 27 71,093 *80 48,360 5,719 85,115 63 7,216 -- 62,824 5,496 Net short-term capital gain (less loss)........................................................................................... 1,541 1,516 39 -295 1,320 1,665 *1,225 -24,132 Net long-term capital gain (less loss)........................................................................................... 51,873 257,078 1,356 112,799 174,951 535,444 57,528 1,636,105 -- 298 91 686 -- *145 *2,263 *2,273 11,129 11,695 208 2,012 -2,314 3,353 813 813 2,585 2,747 9 566 1,804 5,667 -- 161 Other portfolio income (net)........................................................................................... *-385 369 Real estate rental net income (less deficit)........................................................................................... 2,993 8,747 Net income........................................................................................... 3,134 9,886 Deficit........................................................................................... 141 *1,139 Net income (less deficit) from other rental activity........................................................................................... *3,766 1,639 2 3,912 838 *4,470 *237 2,449 2 -- 4,070 158 *1,208 *370 *4,679 *209 *237 -- 2,657 209 Total net income (less deficit)........................................................................................... 738,490 1,032,958 99,767 Net income........................................................................................... 1,019,105 1,438,506 145,165 1,411,773 1,729,712 789,027 1,070,824 2,137,630 2,485,772 296,076 342,692 2,789,023 2,974,295 317,939 281,797 348,142 *46,616 185,272 Net income........................................................................................... *3,767 1,639 Deficit........................................................................................... *1 -- Deficit........................................................................................... 280,615 405,548 45,398 Footnotes at end of table. 59 S Corporation Returns, 1998 Table 1.--S Corporations: Total Income and Deductions, Portfolio Income, Rental Income and Total Net Income, by Industrial Division, Sector, and Major Group--Continued [All figures are estimates based on samples--money amounts are in thousands of dollars] Goods production--continued Manufacturing--continued Electrical Item Plastics and Nonmetallic Primary Fabricated rubber mineral metal metal products products manufacturing products manufacturing manufacturing (25) (26) Computer equipment, Machinery and electronic appliance, and equipment manufacturing products component manufacturing manufacturing manufacturing (30) (31) manufacturing (27) Number of returns........................................................................................... 7,043 5,675 (28) (29) Transportation (32) 3,232 22,590 10,394 6,548 5,909 4,811 8,672 50,694 24,698 14,309 11,924 9,467 Total receipts ¹........................................................................................... 31,343,387 15,283,161 23,411,433 73,728,918 28,591,350 20,428,522 19,049,651 25,270,072 Business receipts........................................................................................... 31,040,548 15,144,223 Interest on Government obligations: 23,245,394 73,026,876 28,345,820 20,331,393 18,914,942 25,020,470 State and local........................................................................................... 13,542 3,844 1,810 Net gain, noncapital assets........................................................................................... 82,689 36,001 28,304 26,939 195,149 13,855 45,000 6,369 15,921 7,098 13,611 11,179 67,299 Number of shareholders........................................................................................... 17,663 12,043 Income and deductions from a trade or business: 60 Other receipts........................................................................................... 206,608 99,093 135,925 479,954 186,675 74,839 114,000 171,123 Total deductions........................................................................................... 29,092,282 14,324,520 22,610,533 68,107,646 26,499,982 19,043,719 17,817,172 23,673,072 Cost of goods sold........................................................................................... 21,125,203 9,638,635 18,959,667 Compensation of officers........................................................................................... 1,057,540 456,163 362,762 48,447,252 3,127,747 18,625,272 1,125,048 13,654,474 643,410 12,454,497 534,137 18,762,519 416,567 Salaries and wages........................................................................................... 1,943,417 1,203,282 Repairs........................................................................................... 139,095 140,264 Bad debts........................................................................................... 47,263 39,592 851,320 115,690 20,482 4,936,366 326,756 139,090 2,122,771 108,583 32,643 1,833,603 56,281 27,528 1,739,989 76,553 29,551 1,386,975 75,073 20,457 Rent paid on business property........................................................................................... 331,312 296,089 113,475 Taxes paid........................................................................................... 633,682 404,425 323,143 979,077 1,728,647 340,777 654,806 238,230 344,872 201,145 359,235 203,389 463,985 Interest paid........................................................................................... 395,383 174,532 Amortization........................................................................................... 25,784 14,788 219,676 11,424 848,345 53,490 352,441 21,306 166,921 17,252 184,733 16,641 235,493 19,086 Depreciation........................................................................................... 1,042,977 559,681 Depletion........................................................................................... 1,040 10,137 461,468 -- 2,187,640 -- 683,171 -- 381,029 106 361,898 57 466,701 -- Advertising........................................................................................... 178,285 138,834 Pension, profit-sharing, stock 26,174 370,392 210,729 211,751 237,083 131,161 bonus, and annuity plans........................................................................................... 133,489 73,431 84,562 Employee benefit programs........................................................................................... 373,440 169,648 200,098 431,582 984,818 182,655 423,058 94,358 143,817 87,018 225,614 77,312 297,610 Net loss, noncapital assets........................................................................................... 5,855 *509 1,326 Other deductions........................................................................................... 1,658,516 1,004,508 859,267 11,407 3,535,038 649 1,616,075 5,860 1,224,227 1,878 1,307,142 1,500 1,115,243 Total receipts less total deductions........................................................................................... 2,251,105 958,641 800,900 5,621,272 2,091,368 1,384,803 1,232,479 1,597,000 Net income (less deficit) from a trade or business........................................................................................... 2,237,563 954,797 799,090 5,594,333 2,077,513 1,378,435 1,225,382 1,585,821 946,443 147,353 6,270,142 675,810 2,341,951 264,438 1,668,006 289,572 1,477,438 252,056 1,833,849 248,029 Portfolio income (less deficit) distributed to shareholders........................................................................................... 201,245 65,279 83,268 Net income........................................................................................... 2,455,844 1,158,665 Deficit........................................................................................... 218,281 203,868 1,283,177 498,515 403,275 138,595 829,836 Dividend income........................................................................................... 9,594 2,182 Interest income........................................................................................... 75,379 47,314 4,506 45,149 32,154 220,626 11,377 106,169 8,456 59,424 6,230 50,771 10,715 90,248 Royalty income........................................................................................... 3,735 404 Net short-term capital gain (less loss)........................................................................................... -178 572 346 2,988 11,978 3,268 5,154 4,760 2,527 1,745 346 307 12,623 -777 Net long-term capital gain (less loss)........................................................................................... 112,638 14,757 30,814 Other portfolio income (net)........................................................................................... *76 50 1,025,411 368,617 331,397 63,830 724,880 -75 253 29 *423 -13 11 6,708 6,762 34,596 35,666 8,244 8,850 2,088 2,088 2,820 6,306 6,564 7,251 54 1,071 606 -- *3,485 687 Real estate rental net income (less deficit)........................................................................................... 7,368 9,713 Net income........................................................................................... 7,882 9,836 Deficit........................................................................................... 515 122 Net income (less deficit) from other rental activity........................................................................................... 1,145 *526 2,997 15,524 14,488 *1,823 2,222 8,022 *3,518 521 16,457 *933 14,797 309 *1,823 *1 2,222 -- 8,547 525 Total net income (less deficit)........................................................................................... 2,447,320 1,030,315 892,063 Net income........................................................................................... 2,644,113 1,215,719 1,029,135 6,927,630 7,518,133 2,598,760 2,836,414 1,785,620 2,057,214 1,369,018 1,588,690 2,430,243 2,625,237 590,504 237,654 271,594 219,672 194,994 Net income........................................................................................... 1,491 *604 Deficit........................................................................................... 346 *78 Deficit........................................................................................... 196,792 185,404 Footnotes at end of table. 60 137,072 S Corporation Returns, 1998 Table 1.--S Corporations: Total Income and Deductions, Portfolio Income, Rental Income and Total Net Income, by Industrial Division, Sector, and Major Group--Continued [All figures are estimates based on samples--money amounts are in thousands of dollars] Goods production--continued Distribution and transportation of goods Manufacturing--continued Furniture Item and related Miscellaneous products manufacturing Wholesale and retal trade Total Total Durable goods Nondurable goods Total (38) (39) (40) manufacturing (33) Retail trade Wholesale trade Total (34) (35) (36) (37) 566,076 484,772 147,102 86,338 60,764 337,251 Number of shareholders........................................................................................... 11,687 43,781 1,030,083 894,361 288,210 171,111 117,099 605,636 Number of returns........................................................................................... 6,047 20,201 Income and deductions from a trade or business: Total receipts ¹........................................................................................... 14,240,281 37,915,117 1,376,793,674 1,290,432,025 542,436,210 260,541,519 281,894,691 747,355,429 Business receipts........................................................................................... 14,101,966 37,537,868 1,359,639,369 Interest on Government obligations: State and local........................................................................................... 2,962 7,737 162,686 1,274,948,656 537,166,311 257,758,166 279,408,146 737,155,889 149,304 95,740 40,194 55,546 53,564 Net gain, noncapital assets........................................................................................... 3,462 89,371 2,107,149 Other receipts........................................................................................... 131,891 280,142 14,884,471 1,247,392 14,086,673 658,093 4,516,066 304,934 2,438,225 353,158 2,077,841 583,634 9,562,342 Total deductions........................................................................................... 13,466,338 35,495,875 1,344,071,813 Cost of goods sold........................................................................................... 9,645,740 23,522,345 1,044,645,203 1,260,741,913 1,009,807,841 526,356,182 425,435,868 250,634,402 196,992,291 275,721,780 228,443,576 733,755,764 583,926,784 Compensation of officers........................................................................................... 440,220 1,618,806 26,404,681 Salaries and wages........................................................................................... 1,102,964 3,589,601 98,501,831 23,807,555 86,715,505 11,744,718 34,547,175 6,700,262 18,954,502 5,044,456 15,592,674 12,059,353 52,130,407 Repairs........................................................................................... 54,599 190,758 Bad debts........................................................................................... 29,607 80,044 6,489,764 2,216,029 4,728,247 2,038,043 1,852,875 1,115,998 854,629 664,944 998,246 451,054 2,871,446 921,352 Rent paid on business property........................................................................................... 217,857 590,749 25,304,014 Taxes paid........................................................................................... 326,767 800,222 19,089,884 20,041,095 16,242,717 5,961,435 6,936,447 3,137,671 2,841,933 2,823,764 4,094,514 14,068,358 9,299,312 Interest paid........................................................................................... 121,673 428,174 Amortization........................................................................................... 4,925 82,846 10,970,296 838,966 9,711,579 772,287 4,177,183 306,044 2,251,039 92,145 1,926,144 213,899 5,522,920 465,050 Depreciation........................................................................................... 226,864 648,738 Depletion........................................................................................... -632 14,064,554 20,687 9,770,114 20,277 4,123,086 7,435 2,291,042 *5,825 1,832,044 1,609 5,639,210 12,842 Advertising........................................................................................... 165,695 509,832 Pension, profit-sharing, stock 12,698,473 12,410,876 2,828,466 1,507,921 1,320,544 9,569,896 bonus, and annuity plans........................................................................................... 39,939 150,060 2,382,326 Employee benefit programs........................................................................................... 140,164 413,976 6,022,250 Net loss, noncapital assets........................................................................................... 804 1,511 99,848 2,115,608 5,066,037 84,612 1,242,784 2,138,019 23,547 748,380 1,227,385 9,966 494,404 910,634 13,581 872,612 2,919,127 61,066 Other deductions........................................................................................... 948,521 2,867,582 74,323,005 57,409,519 23,915,103 12,354,467 11,560,636 33,416,028 Total receipts less total deductions........................................................................................... 773,944 2,419,242 32,721,862 29,690,112 16,080,029 9,907,117 6,172,911 13,599,665 Net income (less deficit) from a trade or business........................................................................................... 770,981 2,411,505 32,559,176 29,540,808 15,984,289 9,866,923 6,117,366 13,546,101 42,242,643 -9,683,467 37,628,641 -8,087,833 19,104,710 -3,120,421 11,545,461 -1,678,538 7,559,249 -1,441,883 18,504,047 -4,957,945 distributed to shareholders........................................................................................... 29,886 630,544 8,620,573 Net income........................................................................................... 879,740 2,904,562 Deficit........................................................................................... -108,758 -493,056 Portfolio income (less deficit) 8,163,305 4,064,069 1,860,891 2,203,177 4,095,128 Dividend income........................................................................................... 1,670 16,895 Interest income........................................................................................... 29,445 105,016 Royalty income........................................................................................... 35 7,992 239,631 2,144,944 135,335 213,780 1,930,422 134,616 112,682 902,220 86,968 59,140 493,546 34,939 53,542 408,674 52,029 101,065 1,024,559 47,649 Net short-term capital gain (less loss)........................................................................................... *-3,938 -4,305 43,452 23,495 -2,447 -4,483 2,036 25,801 Net long-term capital gain (less loss)........................................................................................... 2,101 504,938 6,046,682 5,851,870 2,958,359 1,272,005 1,686,354 2,893,221 Other portfolio income (net)........................................................................................... 574 8 10,528 9,121 6,287 5,745 542 2,834 402,120 447,849 357,099 396,456 159,513 177,580 62,344 68,285 97,169 109,294 196,838 218,128 45,729 39,357 18,067 5,941 12,125 21,290 Real estate rental net income (less deficit)........................................................................................... 1,611 11,321 Net income........................................................................................... 1,611 11,515 Deficit........................................................................................... -- 194 Net income (less deficit) from other rental activity........................................................................................... -2,256 184,433 142,750 75,329 62,903 12,425 67,491 Net income........................................................................................... -2,401 231,335 155,584 83,758 70,745 13,013 71,826 Deficit........................................................................................... -- 46,902 12,834 8,430 *7,842 *588 4,335 Total net income (less deficit)........................................................................................... 802,479 3,055,626 41,766,302 Net income........................................................................................... 908,351 3,473,012 50,348,270 38,203,962 45,219,674 20,283,199 22,842,215 11,853,062 13,293,776 8,430,137 9,548,439 17,905,559 22,355,608 7,015,712 2,559,016 1,440,715 1,118,302 4,450,049 145 Deficit........................................................................................... 105,872 417,385 8,581,968 Footnotes at end of table. 61 S Corporation Returns, 1998 Table 1.--S Corporations: Total Income and Deductions, Portfolio Income, Rental Income and Total Net Income, by Industrial Division, Sector, and Major Group--Continued [All figures are estimates based on samples--money amounts are in thousands of dollars] Distribution and transportation of goods--continued Wholesale and retal trade--continued Retail trade--continued Building Item Motor vehicle Furniture Electronics material Food Health and and home and and garden and and Gasoline Clothing and clothing parts dealers furnishings appliance equipment beverage personal care stations accessories (45) (46) (47) (48) and supplies dealers (41) (42) (43) Number of returns........................................................................................... 46,613 18,305 (44) 17,299 19,718 52,362 20,123 20,221 27,995 31,112 38,827 96,797 32,803 36,978 48,039 Total receipts ¹........................................................................................... 386,117,380 28,904,837 23,650,470 40,468,336 88,061,217 22,201,818 49,723,094 17,062,667 Business receipts........................................................................................... 380,210,138 28,574,444 Interest on Government obligations: 23,315,889 40,173,943 86,836,893 22,086,417 49,374,589 16,929,749 State and local........................................................................................... 12,453 4,996 4,588 Net gain, noncapital assets........................................................................................... 233,819 3,459 20,604 1,738 34,247 12,876 88,580 2,701 14,513 1,012 8,596 2,979 8,996 Number of shareholders........................................................................................... 82,834 34,078 Income and deductions from a trade or business: Other receipts........................................................................................... 5,660,970 321,938 309,388 258,408 1,122,868 98,188 338,897 120,943 Total deductions........................................................................................... 381,767,627 27,858,903 Cost of goods sold........................................................................................... 332,584,168 17,822,948 22,879,180 17,003,037 39,199,047 28,911,828 86,432,594 64,430,081 21,521,813 14,900,794 49,234,795 41,233,925 16,624,960 10,241,150 Compensation of officers........................................................................................... 3,574,467 869,972 578,058 Salaries and wages........................................................................................... 18,523,185 3,223,303 2,293,175 1,136,379 3,775,598 1,342,429 7,985,809 887,502 2,421,769 408,322 2,642,986 598,332 1,929,698 63,015 38,497 212,262 99,294 673,245 77,255 67,339 49,027 274,317 20,574 69,906 45,296 Rent paid on business property........................................................................................... 3,443,403 1,249,259 476,833 Taxes paid........................................................................................... 3,079,038 594,475 364,477 774,437 723,624 2,296,621 1,511,750 618,731 347,855 845,541 654,719 1,053,002 358,801 Interest paid........................................................................................... 2,713,720 185,569 Amortization........................................................................................... 97,271 14,301 113,663 15,315 377,392 15,956 565,999 114,279 114,266 30,899 359,640 63,363 158,925 15,196 Depreciation........................................................................................... 1,611,702 220,795 Depletion........................................................................................... *2,683 -- 173,234 *114 436,768 5,606 1,034,572 *2,080 137,363 -- 674,718 -- 147,452 *2,360 Advertising........................................................................................... 3,832,993 1,091,730 Pension, profit-sharing, stock 303,111 350,659 867,667 349,382 104,450 436,551 bonus, and annuity plans........................................................................................... 226,416 67,143 42,084 Employee benefit programs........................................................................................... 1,281,032 140,373 79,066 104,997 211,828 139,308 526,519 56,296 101,223 24,790 89,944 40,588 68,949 Net loss, noncapital assets........................................................................................... 15,714 *2,258 *1,813 Other deductions........................................................................................... 9,640,931 2,137,498 1,333,688 1,308 2,061,111 6,674 4,858,307 *11,368 1,427,999 2,973 1,834,533 7,538 1,451,214 Total receipts less total deductions........................................................................................... 4,349,752 1,045,934 771,290 1,269,289 1,628,623 680,005 488,298 437,707 766,702 1,267,551 1,615,747 677,304 487,287 434,728 921,755 155,053 1,533,821 266,269 2,216,386 600,640 954,533 277,229 800,103 312,817 784,956 350,227 distributed to shareholders........................................................................................... 1,193,582 210,714 489,283 Repairs........................................................................................... 846,213 171,504 Bad debts........................................................................................... 294,692 67,776 62 Net income (less deficit) from a trade or business........................................................................................... 4,337,299 1,040,938 Net income........................................................................................... 5,625,530 1,241,434 Deficit........................................................................................... 1,288,231 200,496 Portfolio income (less deficit) 113,820 373,702 64,955 281,489 125,505 Dividend income........................................................................................... 15,416 7,685 Interest income........................................................................................... 426,596 70,474 3,800 32,524 18,215 75,400 18,411 173,056 2,876 26,463 2,188 60,035 2,430 22,012 Royalty income........................................................................................... *258 1,218 Net short-term capital gain (less loss)........................................................................................... 12,724 -539 -- 86 1,096 -- 373 4,463 12,003 2,230 -703 *-523 -711 -691 Net long-term capital gain (less loss)........................................................................................... 737,391 131,860 440,956 17,889 181,710 36,139 219,512 97,291 -- -- *133 -- *91 -- 2,656 *2,753 8,369 9,156 48,876 51,061 *6,813 *7,219 24,745 25,651 2,144 2,269 *97 *788 *2,185 *406 *906 124 *176 1,994 *1,232 10 6,371 *51 *176 -- 2,546 552 *1,232 -- 10 -- 6,371 -- *225 *174 Total net income (less deficit)........................................................................................... 5,604,691 1,280,460 1,258,817 Net income........................................................................................... 6,731,765 1,448,370 1,406,250 1,391,733 1,643,728 2,039,557 2,582,057 749,082 1,018,951 799,891 1,083,250 562,429 876,479 251,995 542,500 269,869 283,359 314,050 Other portfolio income (net)........................................................................................... *1,196 *17 Real estate rental net income (less deficit)........................................................................................... 46,931 7,050 Net income........................................................................................... 50,876 7,471 Deficit........................................................................................... 3,945 421 Net income (less deficit) from other rental activity........................................................................................... 26,878 *21,757 Net income........................................................................................... 30,440 *21,757 Deficit........................................................................................... 3,562 -- Deficit........................................................................................... 1,127,074 167,911 62 Footnotes at end of table. 147,433 S Corporation Returns, 1998 Table 1.--S Corporations: Total Income and Deductions, Portfolio Income, Rental Income and Total Net Income, by Industrial Division, Sector, and Major Group--Continued [All figures are estimates based on samples--money amounts are in thousands of dollars] Distribution and transportation of goods--continued Wholesale and retal trade--continued Transportation and warehousing Retail trade--continued Sporting Item Wholesale Air, rail goods, General Miscellaneous Nonstore and retail trade hobby, book, merchandise store retailers not allocable (52) (53) and music (49) Total and water transportation Truck transportation retailers (50) (51) Number of returns........................................................................................... 20,180 7,823 (54) (55) (56) 64,065 22,547 419 81,305 5,993 40,805 110,085 37,620 515 135,722 7,971 70,300 Total receipts ¹........................................................................................... 12,656,088 8,844,342 46,315,298 23,349,882 640,386 86,361,649 7,370,140 46,140,674 Business receipts........................................................................................... 12,423,941 8,723,975 Interest on Government obligations: 45,551,871 22,954,038 626,456 84,690,713 6,970,718 45,329,515 State and local........................................................................................... *458 *1,206 4,500 Net gain, noncapital assets........................................................................................... 38,719 6,664 75,067 4,057 50,372 -*5,665 13,382 859,757 1,606 305,959 6,104 472,036 Number of shareholders........................................................................................... 42,721 13,741 Income and deductions from a trade or business: Other receipts........................................................................................... 192,971 112,497 683,860 341,415 8,264 797,798 91,857 333,019 Total deductions........................................................................................... 12,385,861 8,647,066 44,703,049 22,500,868 629,968 83,329,900 7,283,688 44,387,330 Cost of goods sold........................................................................................... 7,848,822 5,776,231 29,809,193 Compensation of officers........................................................................................... 354,053 171,565 1,550,203 Salaries and wages........................................................................................... 1,296,503 1,048,014 4,546,885 13,364,608 588,073 2,443,482 445,190 *3,484 37,922 34,837,361 2,597,126 11,786,327 3,302,407 101,367 786,517 14,651,548 1,325,883 7,480,965 244,378 55,815 136,377 136,738 3,926 693 1,761,517 177,986 328,868 19,696 1,128,410 72,009 Rent paid on business property........................................................................................... 679,065 382,608 1,857,186 Taxes paid........................................................................................... 240,885 171,680 826,262 391,673 425,746 11,302 6,959 5,262,919 2,847,167 285,016 149,175 3,550,007 1,951,473 Interest paid........................................................................................... 138,283 86,143 Amortization........................................................................................... 10,372 6,904 496,980 43,613 212,340 37,583 11,476 *1,193 1,258,717 66,679 241,293 14,011 644,648 29,559 Depreciation........................................................................................... 168,442 90,218 Depletion........................................................................................... --- 543,519 -- 400,425 -- 7,818 -- 4,294,441 410 704,620 -- 2,653,045 104 Advertising........................................................................................... 241,845 216,889 Pension, profit-sharing, stock 588,103 1,186,517 12,515 287,597 32,570 118,939 bonus, and annuity plans........................................................................................... 15,828 12,282 69,040 Employee benefit programs........................................................................................... 51,116 35,062 178,845 73,838 155,169 212 *8,891 266,717 956,213 22,533 65,141 139,324 629,312 Net loss, noncapital assets........................................................................................... *9,360 *381 1,220 Other deductions........................................................................................... 1,247,084 584,013 3,891,807 458 2,947,841 -78,388 15,236 16,913,486 *9,562 1,220,911 *2,715 10,009,391 Total receipts less total deductions........................................................................................... 270,227 197,276 1,612,248 849,015 10,418 3,031,750 86,452 1,753,344 Repairs........................................................................................... 62,099 50,791 Bad debts........................................................................................... 22,104 14,284 Net income (less deficit) from a trade or business........................................................................................... 269,769 196,070 1,607,749 844,958 10,418 3,018,368 84,846 1,747,240 2,226,504 618,755 1,299,937 454,979 *19,884 9,466 4,614,002 1,595,635 594,504 509,658 2,300,578 553,338 Portfolio income (less deficit) distributed to shareholders........................................................................................... 669,963 14,679 257,926 Net income........................................................................................... 547,395 351,692 Deficit........................................................................................... 277,626 155,622 299,510 4,108 457,268 80,057 209,075 Dividend income........................................................................................... 3,693 1,045 Interest income........................................................................................... 12,798 10,485 22,145 62,497 3,159 52,220 34 3,643 25,851 214,523 6,847 50,929 7,906 74,003 Royalty income........................................................................................... 1,152 -Net short-term capital gain (less loss)........................................................................................... *-456 2,512 *33,588 5,415 -- 719 711 6 639 *-684 *142 19,957 *18,433 -1,434 137,732 239,327 290 194,812 3,117 127,733 Other portfolio income (net)........................................................................................... --*1,324 73 -- 1,407 *19 861 30,545 37,779 13,493 14,834 *748 *748 45,021 51,394 3,413 3,429 12,744 13,274 7,234 1,341 -- 6,372 16 531 Net long-term capital gain (less loss)........................................................................................... 652,776 *637 Real estate rental net income (less deficit)........................................................................................... *-284 5,500 Net income........................................................................................... *844 8,216 Deficit........................................................................................... *1,127 *2,716 Net income (less deficit) from other rental activity........................................................................................... *36 69 3,056 *5,861 -70 41,683 23,961 2,924 3,056 -- *5,885 24 -70 75,751 34,069 54,864 30,903 4,410 1,486 Total net income (less deficit)........................................................................................... 939,485 216,318 1,899,276 Net income........................................................................................... 1,181,648 364,827 2,444,797 1,163,821 1,573,486 15,204 21,851 3,562,340 5,128,596 192,277 729,607 1,971,982 2,507,678 409,665 6,647 1,566,256 537,330 535,696 Net income........................................................................................... *59 69 Deficit........................................................................................... *22 -- Deficit........................................................................................... 242,163 148,509 545,521 Footnotes at end of table. 63 S Corporation Returns, 1998 Table 1.--S Corporations: Total Income and Deductions, Portfolio Income, Rental Income and Total Net Income, by Industrial Division, Sector, and Major Group--Continued [All figures are estimates based on samples--money amounts are in thousands of dollars] Distribution and transportation of goods--continued Information Motion Transportation and warehousing--continued Transit and Other Warehousing Item ground Pipeline transportation and passenger transportation and support storage transportation (57) Total picture Broadcasting Publishing and sound and telecom- industries recording munications activities (58) industries (59) Number of returns........................................................................................... 8,049 *47 (60) (61) (62) (63) (64) 22,794 3,615 56,082 16,724 13,479 17,690 37,597 9,131 115,281 34,821 22,131 44,453 22,999,931 5,114,837 49,122,624 20,925,871 8,143,642 15,167,515 22,755,399 4,961,410 47,432,591 20,020,272 7,863,175 15,191,385 Number of shareholders........................................................................................... 10,642 *81 Income and deductions from a trade or business: Total receipts ¹........................................................................................... 4,374,613 *361,452 Business receipts........................................................................................... 4,319,619 *354,051 Interest on Government obligations: State and local........................................................................................... *53 *82 3,401 2,136 44,864 17,297 9,128 16,717 Net gain, noncapital assets........................................................................................... 21,102 *20 33,437 Other receipts........................................................................................... 33,840 *7,300 207,694 27,203 124,089 285,766 1,359,403 56,225 832,077 2,345 268,994 219,771 -260,358 22,228,138 13,560,483 4,820,194 1,880,717 46,303,600 17,467,930 19,158,852 7,619,975 7,879,488 2,947,749 14,821,774 5,545,546 Compensation of officers........................................................................................... 183,164 *3,980 841,393 Salaries and wages........................................................................................... 851,111 *4,540 1,820,597 141,339 842,596 3,450,718 7,999,677 1,258,295 3,502,975 1,014,137 739,991 674,203 2,821,914 Repairs........................................................................................... 111,045 *167 Bad debts........................................................................................... 5,477 -- 129,157 68,003 63,869 12,801 325,619 250,623 94,678 90,290 63,082 14,002 137,996 143,725 Rent paid on business property........................................................................................... 239,967 *2,525 544,596 Taxes paid........................................................................................... 194,007 *2,060 369,520 640,809 180,933 1,163,323 1,296,916 411,134 481,877 257,045 165,656 374,436 495,160 Interest paid........................................................................................... 114,740 *5,100 Amortization........................................................................................... 6,782 *3,379 155,197 9,371 97,740 3,577 831,543 551,726 209,565 137,179 91,131 199,057 463,126 194,496 Depreciation........................................................................................... 311,448 *8,630 Depletion........................................................................................... 306 -- 466,443 -- 150,255 -- 1,467,497 -- 363,264 -- 374,983 -- 647,639 -- Advertising........................................................................................... 23,877 *27 102,263 Pension, profit-sharing, stock bonus, and annuity plans........................................................................................... 25,816 -42,219 9,921 881,772 452,274 96,048 278,787 36,824 413,848 242,958 58,365 68,963 Employee benefit programs........................................................................................... 75,643 -108,160 Net loss, noncapital assets........................................................................................... 1,328 -*989 77,958 *642 408,012 9,951 243,050 412 25,803 48 98,176 9,431 Other deductions........................................................................................... 923,935 *69,287 4,009,748 680,215 9,784,443 4,050,926 1,832,391 2,868,177 Total receipts less total deductions........................................................................................... 109,042 *16,475 771,793 294,643 2,819,024 1,767,019 264,153 345,740 Total deductions........................................................................................... 4,265,571 *344,978 Cost of goods sold........................................................................................... 1,196,924 *245,282 64 Net income (less deficit) from a trade or business........................................................................................... 108,990 *16,392 768,392 292,507 2,774,160 1,749,722 255,025 329,024 1,113,815 -345,423 389,495 -96,988 5,549,495 -2,775,335 2,299,131 -549,410 829,642 -574,617 1,706,892 -1,377,868 distributed to shareholders........................................................................................... 31,007 *2,625 59,613 Net income........................................................................................... 197,089 *18,521 Deficit........................................................................................... -88,099 *2,129 Portfolio income (less deficit) 74,892 2,628,957 855,916 314,408 1,391,114 Dividend income........................................................................................... 2,140 *5 Interest income........................................................................................... 12,437 *1,594 Royalty income........................................................................................... --- 6,797 42,735 -- 2,156 32,824 2 65,654 340,512 15,872 36,243 111,894 1,219 9,264 51,952 61 17,942 160,700 972 Net short-term capital gain (less loss)........................................................................................... *213 -- 2,177 568 -49,504 -63,751 15,175 -626 Net long-term capital gain (less loss)........................................................................................... 15,739 *1,025 7,861 39,336 2,248,352 769,816 235,422 1,207,086 43 5 8,071 *496 *2,534 5,041 Other portfolio income (net)........................................................................................... *479 -Real estate rental net income (less deficit)........................................................................................... 441 Net income........................................................................................... 485 --- -559 5,204 28,982 29,001 53,534 54,347 18,429 18,914 18,652 18,661 7,958 8,231 Deficit........................................................................................... 44 -- *5,763 19 813 486 *10 273 Net income (less deficit) from other rental activity........................................................................................... *5,564 *10 6,404 *2,819 8,542 1,558 *1,068 5,700 7,845 1,441 *2,928 109 8,703 *161 1,559 *1 *1,128 *60 5,742 42 Total net income (less deficit)........................................................................................... 146,002 *19,027 833,851 Net income........................................................................................... 228,111 *20,925 1,162,119 399,200 480,156 5,465,193 7,853,348 2,625,625 3,052,501 589,153 1,112,039 1,733,796 2,915,131 80,956 2,388,155 426,876 522,886 1,181,335 Net income........................................................................................... *5,695 *10 Deficit........................................................................................... 130 -- Deficit........................................................................................... 82,109 Footnotes at end of table. 64 *1,898 328,268 S Corporation Returns, 1998 Table 1.--S Corporations: Total Income and Deductions, Portfolio Income, Rental Income and Total Net Income, by Industrial Division, Sector, and Major Group--Continued [All figures are estimates based on samples--money amounts are in thousands of dollars] Information-- Finance, insurance, real estate, and rental and leasing continued Item Information Finance and insurance Securites, Total services Total Depository Non- commodity Insurance Funds, trusts, credit depository contracts, carriers and and other inter- credit inter- other financial related financial mediation mediation investments activities vehicles (71) (72) and related activities (65) (66) (67) Number of returns........................................................................................... 8,189 403,085 (68) (69) (70) 102,884 746 21,525 33,846 45,777 990 197,735 6,406 38,978 72,137 77,876 2,337 Total receipts ¹........................................................................................... 4,885,596 122,080,521 64,269,156 2,184,749 14,166,876 24,519,052 23,023,819 374,661 Business receipts........................................................................................... 4,357,760 113,156,413 Interest on Government obligations: 58,387,565 707,926 12,637,821 22,003,890 22,728,460 309,467 State and loca [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%3Acee297a03a6d68e3. Public record. Not legal advice.