Class 7c S Corp Basis

Class 7c S Corp Basis - TaxationoftheBusinessEntity...

Info iconThis preview shows pages 1–7. Sign up to view the full content.

View Full Document Right Arrow Icon
Basis Issues Taxation of the Business Entity Online Lecture Series Presented by Akore Berliner, CPA
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Owner Rewards Owner Rewards Owners / Shareholders can withdraw  money from an S Corp in the following  ways: Salary Draw = Distribution of Cash Loan Repayment Rental Income of Equipment owned by  Shareholder but used in Company Business 
Background image of page 2
Owner Rewards - Taxation Owner Rewards - Taxation Salary  = On a W-2 as ordinary income Draw  or  Distribution  = Tax Free to Extent of Basis Loan Repayment  = Tax Free to Extent of  Principal Repayment, Excess is Interest Income Rental Income  of Equipment owned by  Shareholder but used in Company Business =  Taxable Income but not subject to employment  tax
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
What is a Distribution? What is a Distribution? Cash or property withdrawn from the S Corp by a  shareholder that does not fall into another  classification.  Not SALARY! No Deduction on the Income Statement!  This is an Equity Transaction Debit to Distribution Credit to Cash Amount of distribution to shareholder = cash + FMV of any  other property distributed Taxation of distribution depends on whether the S corp has  shareholder’s basis
Background image of page 4
S Corporation Distributions  S Corporation Distributions  Where  no Earnings and Profits exist 1.  Nontaxable to the extent of adjusted             basis in stock 2.  Excess treated as gain from the sale  or exchange of property (capital gain      in most cases)
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
S Corporation Distributions S Corporation Distributions Where  Earnings and Profits exist 1.  Tax-free to the extent of accumulated adjustments  account* 2. Remaining distribution is ordinary dividend from AEP** 4.  Tax-free to extent of Other Adjustments Account 5.  Tax-free reduction in basis of stock
Background image of page 6
Image of page 7
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 21

Class 7c S Corp Basis - TaxationoftheBusinessEntity...

This preview shows document pages 1 - 7. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online