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Congressional Research Service
Version 00 · Introduced in Senate · Jul 13, 2016
S Corporation Modernization Act of 2016
This bill amends the Internal Revenue Code, with respect to the tax treatment of S corporations, to:
allow a nonresident alien to be a qualifying beneficiary of an electing small business trust (ESBT), which is a type of trust that is permitted to hold shares in an S corporation;
allow S corporations to increase passive investment income from 25% to 60% without incurring additional taxes;
eliminate a provision terminating the S corporation status of corporations with excessive passive income for three consecutive years;
allow any S corporation bank to have individual retirement account shareholders;
allow ESBTs to claim expanded tax deductions for charitable contributions; and
allow an adjustment to the basis of an S corporation's assets upon the death of a shareholder, in the form of a 15-year amortization deduction.
People & committees
Sen. Thune, John [R-SD] · R–SD
Legislative record
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Read twice and referred to the Committee on Finance.
Introduced in Senate
Primary sources
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Source last updated: Dec 5, 2025. Consult Congress.gov for the current record.
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