This was originally published on September 23rd, 2010.
I recently wrote on a strategy for old C corporations with appreciated properties. The idea is to make an S election and wait out the built-in gains period. Among the provisions of the Jobs Act which just passed the House and is now awaiting signature is a shortening of the period to five years. This is a lot less than 10, but it is still greater than 3. So a corporation that cannot rely on having active income will still want to purge its earnings and profits before the favorable rate on dividends goes away. The shortening of the recognition period makes this strategy much more viable.
I need to thank Jeff for pointing out that the shortening of recognition period is not a permanent provision. Someone electing in 2011 still faces a 10 year period. The period was shortened to seven years for sales in 2009 and 2010. We can't count on the shorter period sticking for someone who elects in 2011.