A taxpayer owes $2500 on her personal taxes. She pays for it with a check from a SMLLC filing as a C Corp. Does this $2500 become a distribution to its owner taxable as a dividend??
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Why not record it as a loan to the Shareholder? Need corporate minutes and interest on the loan.Jiggers, EA -
One time loan may be ok, but if this becomes a routine every tax year then it may become a problem. I have always advised that any money distributed to a shareholder from corporate account that is not a reimbursement of business expense is a dividend.Originally posted by Jiggers View PostTaxes after all are the dues that we pay for the privileges of membership in an organized society. - FDRComment
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This makes sense, but I have a problem with taxpayers who simply add to the "loan" every time they need money and never pay it back. Just like ATSMAN says.
I think I will do this, and insist the next time they are paid on a 1099, deduct the amount from the payment.Comment
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Why not? Because then it needs to be paid back.Originally posted by Jiggers View Post
I thought 1099-NEC forms did not need to be issued to corporations. To pay back a loan, doesn't the shareholder need to come up with money out of their own (after tax) pocket, not from the revenues of the corporation or any other business they operate?Originally posted by Snaggletooth View Post
"You said it, they'll never know the difference. Come on, we'll paint our way out!" - Moe HowardComment
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I thought 1099-NEC forms did not need to be issued to corporations.
RR - But Corporations must issue 1099s to others. In this case, the LLC filing as a C Corp pays its owner for compensation.Comment
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