Excess S Corp Distributions

[BOB W]

Well...............

............. you have all educated me on this issue beyond my knowledge and I thank you for your time and efforts. In the past I have carried excess distributions as loans to officers if the excess distribution was caused by sect 179 or any other temporary reduction to profits, or business loans that would somehow end up in the shareholder pocket, as these will self-adjust in the following years.

The client that I am working on could absorb the $2,800 excess distribution on his tax return with no taxes due.

Again THANKS to all you great guys and gals for your expert replies.

[JG EA]

Your statement:

... Therefore you could say a "AAA account" and a "Other Adjustments Account" are required even though the corporation has never been a C-corp with E&P (earnings & profits).

But then you quote:

Instructions for 1120S, page 35:

... Therefore, it
is recommended that the AAA be
maintained by all S corporations.>>

Instructions for 1120S, page 35:
...
The other adjustments account is adjusted for tax-exempt income (andrelated expenses) and federal taxes attributable to a C corporation tax year....on page 36. >>

My point exactly. It is not required (unless it is required).
JG