SCorp Distribution

[LBR]

A client owns 100% of his S-Corp. He takes a reasonable W2 wage, he also took a distribution (draw) of $65,000.00. Does the distribution carryover to his 1040?
Thanks.

[Roland Slugg]

It depends.

If the $65k was a distribution of PTI, it's not taxable. If it was paid out of retained earnings accumulated prior to the S Corp election, it's a taxable dividend. It could be a combination of both, and some of the distribution could be a return of capital, lowering his basis in the shares.