S-Corp Distribution


A

agav8r

I own a small s-corporation. I am the only employee and
stockholder. I pay myself a reasonable salary monthly. My
question is this. On my personal tax returns I have paid a
decent amount of taxes on the corporations "profits". Over
the last three years it amounts to roughly $60,000 worth of
profits that have been taxed. I am wanting to cut myself a
check for the distribution of a small amount of these funds
for personal use ($20,000). Is there anything I need to do
before I do this? I am assuming that there are no tax
ramifications since it has been taxed once already?? Any
help would be appreciated.

Thanks.
 
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D

David Woods, EA, ChFC, CLU

agav8r said:
I own a small s-corporation. I am the only employee and
stockholder. I pay myself a reasonable salary monthly. My
question is this. On my personal tax returns I have paid a
decent amount of taxes on the corporations "profits". Over
the last three years it amounts to roughly $60,000 worth of
profits that have been taxed. I am wanting to cut myself a
check for the distribution of a small amount of these funds
for personal use ($20,000). Is there anything I need to do
before I do this? I am assuming that there are no tax
ramifications since it has been taxed once already?? Any
help would be appreciated.
It lowers your basis in the stock. Nothing else.
 
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D

Drew Edmundson

I own a small s-corporation. I am the only employee and
stockholder. I pay myself a reasonable salary monthly. My
question is this. On my personal tax returns I have paid a
decent amount of taxes on the corporations "profits". Over
the last three years it amounts to roughly $60,000 worth of
profits that have been taxed. I am wanting to cut myself a
check for the distribution of a small amount of these funds
for personal use ($20,000). Is there anything I need to do
before I do this? I am assuming that there are no tax
ramifications since it has been taxed once already?? Any
help would be appreciated.
In addition to David Woods comment, most (all?) states
consider the distribution to be a "dividend" under state
law. It isn't a dividend for federal (and usually state)
tax purposes but it is for state law. Most (all?) states
require a formal Board of Directors' meeting to declare a
dividend. This should be documented according to the rules
of your state. Further details are available from an
attorney, I am not an attorney.
 

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