SCorp makes excess distribution over basis. This becomes taxable.
What do I do with the AAA account? Do I leave it or what? "In the books AAA account?"
What do I do with the AAA account? Do I leave it or what? "In the books AAA account?"
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Last edited by BOB W; 03-30-2011, 07:30 PM.This post is for discussion purposes only and should be verified with other sources before actual use.
Many times I post additional info on the post, Click on "message board" for updated content. -
Hi Bob,Originally posted by BOB W View Post
If the Corp has been an SCorp since its inception, AAA is meaningless. It's a good idea to keep track of it, but it's only important for ordering rules when there is "Previously Taxed Income" or "Earnings & Profits" from before the S election was made.
Distributions cannot make AAA go to a negative number.
Losses can make AAA negative.
AAA hardly ever equals basis. Debt basis is not in AAA, but affects shareholder basis. There are other things I can't think of right now. -
Right now AAA tax return is negative and so is retained earnings (non-CCorp). Books show negative AAA.Originally posted by BHoffman View Post
Where do I move all negative AAA to, if AAA shows as negative due to excess distributions?This post is for discussion purposes only and should be verified with other sources before actual use.
Many times I post additional info on the post, Click on "message board" for updated content.Comment
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If distributions lowered the AAA account into the negative then whatever is in the negative is possibly excess distributions. You will have to look at the shareholder's stock basis and if any debt basis to know on the excess distributions being taxable on the shareholder's tax return.
Retained Earnings can go into the negative but AAA can not. So the excess distributions will lower retained earnings into negative but not AAA. Page 3 of the S-Corp shows total distributions the shareholder(s) received.Comment
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AAA can go negative due to losses, but not distributions.
Bob, if the Corp has been an SCorp since inception I never worry much about AAA. It's the basis that's important.Comment
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