1.50B-2—Electing small business corporations.
(a) General rule—
(1) In general.
In the case of an electing small business corporation (as defined in section 1371 (b) ), WIN expenses (as defined in paragraph (a) of § 1.50B-1) shall be apportioned pro rata among the persons who are shareholders of such corporation on the last day of such corporation's taxable year, and shall be taken into account for the taxable years of such shareholders within which or with which the taxable year of such corporation ends. The WIN expenses for each employee shall be apportioned separately. In determining who are shareholders of an electing small business corporation on the last day of its taxable year, the rules of paragraph (d)(1) of § 1.1371-1 and of paragraph (a)(2) of § 1.1373-1 shall apply.
(2) Shareholder as taxpayer.
A shareholder to whom WIN expenses are apportioned shall, for purposes of the credit allowed by section 40, be treated as the taxpayer who paid or incurred the expenses allocated to him. If a shareholder takes into account in determining his WIN expenses any WIN expenses with respect to an employee of an electing small business corporation, and if the employment of such employee is terminated in a termination subject to the rules contained in paragraph (a) of § 1.50A-3, or if the electing small business corporation fails to pay comparable wages and such failure is subject to the rules contained in paragraphs (a) (2) and (3) of § 1.50A-3, then such shareholder shall make a recapture determination under the provisions of section 50A (c) and (d) of the Code and § 1.50A-3. See § 1.50A-5.
(3) Computation of the first 12 months of employment.
The first 12 months of employment (whether or not consecutive) and the period described in section 50B(c)(4) of any WIN employee for purposes of determining the amount of WIN expenses (as defined in paragraph (a) of § 1.50B-1) shall not be affected by a change in the shareholders in such corporation and shall not be affected by a reduction in any shareholder's proportionate stock interest in such corporation (for example, by a sale or redemption or by the issuance of additional shares). Thus, the first 12 months of employment (whether or not consecutive) of any WIN employee shall be the same with respect to any shareholder claiming a credit under section 40 for salaries and wages paid or incurred for services rendered by such employee. Also, such first 12 months of employment and the period described in section 50B(c)(4), with respect to any WIN employee, shall not be deemed to begin again because of the making of a valid election under section 1372.
(b) Summary statement.
An electing small business corporation shall attach to its return a statement showing the apportionment to each shareholder of its WIN expenses with respect to each WIN employee.
Code of Federal Regulations
Code of Federal Regulations
447
Code of Federal Regulations
WIN employee No. | WIN expenses |
---|---|
1 | $6,000 |
2 | 5,000 |
3 | 4,000 |
4 | 4,000 |
5 | 3,000 |
Total | 22,000 |
WIN employees | 1 | 2 | 3 | 4 | 5 | Total |
---|---|---|---|---|---|---|
Total WIN expenses | $6,000 | $5,000 | $4,000 | $4,000 | $3,000 | |
Shareholder A (3/10) | 1,800 | 1,500 | 1,200 | 1,200 | 900 | 6,600 |
Shareholder B (2/10) | 1,200 | 1,000 | 800 | 800 | 600 | 4,400 |
Shareholder C (5/10) | 3,000 | 2,500 | 2,000 | 2,000 | 1,500 | 11,000 |