Below is information about CORPORATE OFFICER DISTRIBUTIONS from a variety of sources. Please take a look at the materials that our team has selected for you.
https://www.irs.gov/businesses/small-businesses-self-employed/s-corporation-employees-shareholders-and-corporate-officers
Such payments to the corporate officer are treated as wages. Courts have consistently held S corporation officers/shareholders who provide more than minor services to their corporation and receive, or are entitled to receive, compensation are subject to federal employment taxes. If an officer does not perform any services or only performs minor services …
https://www.henssler.com/c-corporation-distributions/
A distribution in excess of the corporation’s earnings and profits is generally viewed as a nontaxable return of capital to the shareholder. In other words, it is seen as merely a recovery or return of the shareholder’s investment in the corporation. The amount of this distribution first reduces the basis of the shareholder’s stock.
https://www.upcounsel.com/corporate-officer
A corporate officer is a business executive that is assigned specific responsibilities in the daily operation and overall direction of the organization. Some corporations do not distinguish between employees and officers, which means that the officers have more authority than other types of employees but still answer to the board of directors.
https://quickbooks.intuit.com/learn-support/en-us/reports-and-accounting/how-to-record-shareholder-or-corporate-officer-distribution/00/553392
DIstributions are out of company profit but are not a company expense, thus the affect the company retained earnings at year-end and if distributions exceed earings then those distributions are regular income to the recipient. Your entry will be Credit Loan (to return it to 0) and Debit Shareholder Distribution (equity) For further reading
https://www.upcounsel.com/corporate-officer-definition
https://www.lawinsider.com/dictionary/corporate-distributions
Corporate Distributions means all payments to(i) any shareholder(or other holderof an equity interestin Borrower), director, executiveor officer of the Borrower, (ii) any Affiliateor holder of Subordinated Debt of the Borrower, or (iii) any shareholder (or other holder of an equity interest in Borrower), director, executive or officer of any Affiliate or holder of Subordinated Debt of the …
https://www.upcounsel.com/s-corp-shareholder-distributions
Section 1368 notes the distribution by an S corporation of property or cash may result in three distinct tax consequences to the shareholder receiving the distribution. These include: A tax-free reduction of the shareholder's stock basis. Taxable dividend. The selling of the stock may result in capital gains.
https://www.incfile.com/research-topics/s-corporation-info/s-corp-distribution
S Corporation Distribution Rules. When you pay out distributions, you must pay them to owners/corporate officers based on their ownership in the business. This ownership could be set by the operating agreement, or by the issuance or purchase of shares in the business.
https://jberryjohnson.com/s-corp-bonus-vs-distribution-how-to-give-yourself-an-extra-paycheck/
Benefits of paying distributions If an S Corp officer has paid themselves a reasonable salary, the best way to pay out year-end profits is a distribution. An S corp bonus has to be run through payroll and it’s subject to Social Security and Medicare taxes.
https://www.fortenberrylaw.com/distributions-c-corporations/
The primary difference between C corporations and S corporations is that C corporations are taxed twice on earned income: : once at the corporate level when the income is earned, and again at the shareholder level when the income is distributed. The rules governing distributions from C corporations differ from the rules that apply to distributions from S corporations.
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