The S Corporation Modernization Act of 2026 aims to reform the tax treatment of S corporations, particularly in relation to built-in gains that arise upon the death of a shareholder. This legislation seeks to simplify tax implications for shareholders and their estates, making it easier to manage tax obligations during transitions following a shareholder's death. A significant provision of the act introduces a deduction for shareholders inheriting stock, allowing them to amortize the built-in gain over a 15-year period, thereby reducing their taxable income.