Quote Originally Posted by BHoffman View Post
Once in awhile, the company doesn't have enough cash on hand to make the larger total distribution. In that case, the lower taxed guy chooses to lend the difference to the company with a proper promissory note and in compliance with the Loan from Shareholder rules and the loan is repaid ASAP.
Beth, the original post mentioned nothing about the introduction of loans, and clearly did not have loans in mind when this incongruous plot was hatched. Of course, they can bail out of the unequal distribution by booking loans this year, but will they ever be rectified? What happens next year when they want to do some other incongruous distribution? Will the same parties just add to the loan because they [may/may not] be insolvent? I did mention that "the plan...must be dealt with by the corporation to compensate for the inequality.

Dave in Texas, of course given an infinite supply of cash the distributions can be raised to respect a proportional amount where certain of the shareholders are awash with extra funds. Corporation needs extra cash to do this, but yes, it would work.