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https://www.fortenberrylaw.com/distributions-c-corporations/#:~:text=To%20the%20extent%20that%20a%20distribution%20is%20made,the%20shareholder%E2%80%99s%20basis%20in%20the%20corporation%E2%80%99s%20stock.%20
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.fortenberrylaw.com/distributions-c-corporations/
To the extent that a distribution is made from the corporation’s earnings and profits, it is taxed to the shareholder as a dividend. [1] The portion of the distribution that is not considered a dividend is applied first to reduce the shareholder’s basis in the corporation’s stock. [2]
https://www.henssler.com/c-corporation-distributions/
Although distributions of cash or property to the shareholders will reduce the corporation’s earnings and profits (E&P), such distributions will not reduce the corporation’s taxable income. The corporation pays tax on the taxable income, and the shareholders pay tax on dividends received. Dividends
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. A single distribution may include one or more of the above …
https://bizfluent.com/about-7456018-corp-distributions-taxed-.html
Subsequently, Taxpayer A makes a personally guaranteed loan of $50 to S Corporation B. Taxpayer A's basis in S Corporation B is now $150. If S Corporation B now makes a $160 distribution to Taxpayer A, $150 of the distribution will typically be non-taxable; however, $10, the excess of the distribution over basis, is taxable to Taxpayer A as a ...
https://www.incfile.com/research-topics/s-corporation-info/s-corp-distribution
S Corporations reduce your taxes by lessening the amount of payroll or self-employment tax you pay. Money that you take out as a distribution is not subject to the 15.3 percent payroll or self-employment tax, whereas your regular salary payments are. Taxes You Pay on S Corporation Salary and Payroll Earnings
https://quickbooks.intuit.com/learn-support/en-us/reports-and-accounting/how-to-record-shareholder-or-corporate-officer-distribution/00/553392
How to record shareholder or corporate officer distribution? And this holds for both S and C corp, difference is the C corp pays corporate taxes on earnings prior to distributions (and qualified dividends to shareholders are taxed at personal level) but in S corp there is no corporate tax and earnings before distributions are passed through to the shareholders
https://www.irs.gov/pub/irs-news/fs-08-25.pdf
The Internal Revenue Code establishes that any officer of a corporation, including S corporations, is an employee of the corporation for federal employment tax purposes. S corporations should not attempt to avoid paying employment taxes by having their officers treat their compensation as cash distributions, payments of personal expenses, and/or loans rather than as wages.
https://www.thebalancesmb.com/how-business-owners-are-paid-by-the-business-397358
Corporation and S corporate officers who are involved in the day-to-day running of a business are considered employees and they must take a salary and employment taxes must be paid on that salary. In addition, S corporation shareholders may take additional distributions of profit from the business. 2 .
https://ttlc.intuit.com/community/business-taxes/discussion/does-a-officer-of-a-c-corporation-have-to-report-all-compensation-for-payroll-tax-purposes-or-can-a/00/672234
as to what the IRS could do with disproportionate distributions is take the position that the proportionate amounts were dividends but anything else was compensation and then it hits the corp for unpaid payroll taxes, penalties and interest. this could be done to either a C or S-corp. in addition the IRS would change the S to a C-corp and then all its income is subject to …
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