S Corp Shareholders’ distributions. Stay tax-savvy with S Corp.

Dear Mario,

Did you know that as an S corporation shareholder, you can enjoy tax-free distributions as returns on your investment?

Distributions are considered returns of the shareholder’s investment in the company and are tax-free to the extent that the shareholder has a stock basis in the entity.

It is a wonderful way to benefit from your stock basis in the company.

However, be cautious as distributions exceeding the stock basis are taxable. In such cases, it is essential to understand how it may impact your tax liabilities.

A non-dividend distribution more than stock basis is taxed as a capital gain on the shareholder's personal return. It is a long-term capital gain if the S corporation stock has been held for longer than one year.

Mario Lomazzi, CPA

Certified Public Accountant

Business Advisory Services

English - Español

www.mariolomazzicpa.com Schedule time with me

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This publication contains general information only and Mario Lomazzi CPA is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business.

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