In the case of Caselli v. Commissioner, T.C. Memo. 2018-81, a taxpayer wanted to claim a tax credit related to an S corporation in which he had an interest. Unfortunately, the S corporation in question had not made the election to claim the credit in lieu of a full deduction for payroll taxes on its tax return.

The credit in question is found at IRC §45B related to employer social security taxes paid with respect to employee cash tips. Under IRC §45B(c), a taxpayer claiming this credit must reduce the deduction for taxes paid by the taxes for which the credit is given. Under IRC §45B(d) a taxpayer may elect not to claim the credit for a taxable year, thus preserving the deduction for such tips.