Question re: S corp distributions to shareholders

Mar 27, 2024
1:47:57pm

SV72 Sale All-American

So I know that net income is taxable to S-corp shareholders as a pass-through entity. But what about shareholders drawings from retained earnings? Do those get taxed as well? If so, do they taxed as ordinary income?

TIA!

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SV72 Sale

Previous username: Sale
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Joined: Dec 1, 2001
Last login: May 14, 2024
Total posts: 9,642 (7 FO)

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Messages

Author

Time

Question re: S corp distributions to shareholders

SV72 Sale

Mar 27, 1:47pm

RE: Question re: S corp distributions to shareholders

Archaea

Mar 27, 1:49pm

are there not supposed to be retained earnings? What do you do with

SV72 Sale

Mar 27, 3:24pm

There are two potential concepts at play here. Retained earnings is a financial

VenturaCoug

Mar 27, 3:38pm

Tax free up to their basis in the S corp. Anything in excess is capital gain.

allaboutthegainz

Mar 27, 1:50pm

Board name checks out

VenturaCoug

Mar 27, 2:03pm

<< Deleted >>

diluigifan

Mar 27, 1:52pm

Retained earnings have already been taxed. But any distribution must go to current shareholders.

Niiineteeen84

Mar 27, 1:54pm

That makes sense.

Archaea

Mar 27, 1:56pm

If your S corp was previously a C corp with E&P, the advice on this thread may

BYU-Ite

Mar 27, 2:00pm

How does having been converted the C Corp potentially change the advice?

Archaea

Mar 27, 2:01pm

If the S corporation has E&P, a distribution to shareholders may result in:

BYU-Ite

Mar 27, 2:06pm

Thank you. I continue to learn.

Archaea

Mar 27, 2:58pm

Thanks everyone for taking the time to respond. CB feedback is always

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