SECTION 6. APPLICATION OF

§ 168(k)(4) TO S CORPORATIONS AND THEIR SHAREHOLDERS

.01 In General . An S corporation is allowed to make the § 168(k)(4) election. However, any business or AMT credit limitation increases that result from a § 168(k)(4) election are applied at the corporate level and not at the shareholder level. Thus, a shareholder of an S corporation must not increase the shareholder’s business or AMT credit limitations under, respectively, §§ 38(c) and 53(c) by the bonus depreciation amount that results from a § 168(k)(4) election made by the S corporation.

.02 Applicability to S Corporations . Under § 1374(a), an S corporation is subject to tax on its recognized built-in gains during its taxable year. In general, under § 1374(b)(3)(B), an S corporation is allowed as a credit against the § 1374(a)

February 9, 2009 456 2009–6 I.R.B.

electronically. Further, the applicable partnership must mail the Form 1065 and related forms and schedules (including Schedules K–1) to: Internal Revenue Service, 1973 N. Rulon White Blvd., Attn: Audrey Martinez Mail Stop 1120, Ogden, UT 84201.

(2) Taxable years subsequent to the year of election . If the applicable partnership claims a refundable deemed payment under § 3081(b) of the Housing Act for any taxable year subsequent to the year of election, the partnership must make the following statement (printed legibly or typed) on its Form 1065 for that taxable year in the space below the signature section of the Form 1065: “A refund in the amount of $[ Insert Amount ] is requested pursuant to Section 3081(b)(1) of P. L. 110–289, the Housing and Economic Recovery Act of 2008.”