Non liquidating distribution s corporation

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The beginning basis for stock is the amount the shareholder invested to obtain the stock.The beginning basis for debt is the amount the shareholder loaned to the corporation.

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If it is, Form 8615, Tax for Certain Children Who Have Unearned Income, must be completed and attached to the child's tax return.

Shareholders in an S corporation must keep careful track of their tax basis.

The amount of the tax basis determines the tax treatment of such items as flow-through losses and corporate distributions.

The shareholder’s basis is decreased (but not below zero) by the shareholder’s share of the S corporation’s items of loss and deduction, nondeductible expenses (except expenses that are not chargeable to the capital account), depletion deduction for oil and gas property, and distributions to the shareholder that are not made from accumulated earnings and profits.

This helps ensure that the shareholder only benefits once from reductions in income earned by the S corporation.

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