First want to say good to be setting up after the flu. I have been out of the office for 1 1/2 weeks. Just got back in today. Still weak but trying to get going.
With that said I have a couple of customers that have excess distributions in s-corps. What I prefer to do is to report the excess distributions on the personal return and capital gains tax paid. The other option is for it to be catgorized the distributions as loan to shareholder. Almost always the customer will choose loan to shareholder. No problem until it goes over $10,000 then interest needs to accure against the loan.
The difference in tax can be around a few hundred. I really would rather report the excess distributions and have cap. gains paid. Alot of times what happens though is that they owe on their state return because they don't get the cap gain break. So all they see is how much they owe in tax now, not what it will be in the future.
I guess I am saying all this to ask:
Do you let the customer choose what to do? Like I said when given the choice they almost always choose loan to shareholder. I got a new customer this year where their loan to shareholder is over $150,000. I don't want it to grow like this.
Just needing some feedback.
Thank you.
With that said I have a couple of customers that have excess distributions in s-corps. What I prefer to do is to report the excess distributions on the personal return and capital gains tax paid. The other option is for it to be catgorized the distributions as loan to shareholder. Almost always the customer will choose loan to shareholder. No problem until it goes over $10,000 then interest needs to accure against the loan.
The difference in tax can be around a few hundred. I really would rather report the excess distributions and have cap. gains paid. Alot of times what happens though is that they owe on their state return because they don't get the cap gain break. So all they see is how much they owe in tax now, not what it will be in the future.
I guess I am saying all this to ask:
Do you let the customer choose what to do? Like I said when given the choice they almost always choose loan to shareholder. I got a new customer this year where their loan to shareholder is over $150,000. I don't want it to grow like this.
Just needing some feedback.
Thank you.
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