Dividend income from Sub S / Non resident

[Unregistered]

Client is a shareholder in a Sub S corp. He lives in Illinois and the corp is in Michigan. He received a K-1 from the corp ($54,000. ord income) and also a 1099 DIV from the same corp ($48,000) I know he has to file a MIchigan non-resident return for the K-1. What about the Dividend income? Is the tax on those dividends paid to the resident or non-reesident state?

[Bees Knees]

TTB, All States Edition, page MI-4, "A nonresident is subject to Michigan tax on the following types of income:

* Income (including dividend and interest income) from an S corporation, partnership or an unincorporated business or other business activity in Michigan.

[sea-tax]

Client is a shareholder in a Sub S corp. He lives in Illinois and the corp is in Michigan. He received a K-1 from the corp ($54,000. ord income) and also a 1099 DIV from the same corp ($48,000) I know he has to file a MIchigan non-resident return for the K-1. What about the Dividend income? Is the tax on those dividends paid to the resident or non-reesident state?

Question- And this might sound stupid

But why would an S-corp give the shareholder a 1099DIV? Wouldn't it be a dividend distribuiton of profit? I personally have never seen a S-corp issue a 1099 for distributions to a shareholder.In a C-corp yes but S-corp ?

[veritas]

Could be the corp was originally a C Corp and has retained earnings.

[rosieea]

Could be the corp was originally a C Corp and has retained earnings.

Exactly. If the S Corp has E&P from prior C Corp status, any distributions from E&P are reported on 1099-DIV. See the ordering rules in TTB, page 19-9. Also note that an election to distribute E&P first is available.

[sea-tax]

Could be the corp was originally a C Corp and has retained earnings.

Well duh , how stupid of me. I knew that but unfortunately my brain was not working . Thanks for kicking it into gear.

So where ya been lately Veritas! The weather here up north has finally turned to junk. After 3 months of 75 degree weather it is now 5 months of wind and rain. Gotta love it.

[Bees Knees]

The weather here up north has finally turned to junk. After 3 months of 75 degree weather it is now 5 months of wind and rain. Gotta love it.

We visited Victoria earlier this summer. They told us it is generally dry, even though Seattle and Vancouver are rainy. Is that true? Is Victoria in-between all the rain? Or were they pulling our leg?

[sea-tax]

We visited Victoria earlier this summer. They told us it is generally dry, even though Seattle and Vancouver are rainy. Is that true? Is Victoria in-between all the rain? Or were they pulling our leg?

To be frank with ya BEES I haven't a clue . I have not been to Victoria in many years and it is part of Canada, and around these parts most people don't think to kindly of Canada or Canadians. They just drive us nuts over here.

I do know that from a very young age I was trained to always tell others that don't live in Seattle / Washington that it is very rainy up here. This way they won't move up here and we can have it all to ourselves.

[Bees Knees]

I know what you mean. We do the same in Minnesota…talk about the 20 to 30 below winters, when in fact it only gets that cold maybe 1 or 2 weeks once every 5 years.

Sorry ‘bout the Canadian thing. What’d they do? Shoot spit balls across the channel at you guys or somethin’?

[sea-tax]

I know what you mean. We do the same in Minnesota…talk about the 20 to 30 below winters, when in fact it only gets that cold maybe 1 or 2 weeks once every 5 years.

Sorry ‘bout the Canadian thing. What’d they do? Shoot spit balls across the channel at you guys or somethin’?

I personally have nothing agaist them. I just here people in the Pacific NW always making Canadian Jokes.

[veritas]

Well duh , how stupid of me. I knew that but unfortunately my brain was not working . Thanks for kicking it into gear.

So where ya been lately Veritas! The weather here up north has finally turned to junk. After 3 months of 75 degree weather it is now 5 months of wind and rain. Gotta love it.

Hey Sea-Tax,

This weather is putting a crimp on my motorcycle riding. Hopefully we will still have some decent weather. I want to visit my daughter up in Twisp, Wa. How's it going?

[sea-tax]

Hey Sea-Tax,

This weather is putting a crimp on my motorcycle riding. Hopefully we will still have some decent weather. I want to visit my daughter up in Twisp, Wa. How's it going?

Yeah the weather has turned nasty up here as well. Things have been going well had a really busy 9/15/06. like on 9/11/06 evry S-corp or C-corp that was on extension all of a sudden wanted it done yesterday.

hey veritas are you still with HD Vest? If so are you going to Nationals this year? i have never went but am thinking of going.

[veritas]

We were busy too. One more deadline on 10-15. Speaking of HD Vest I was at a chapter meeting today and a new member attended. What is interesting is he owns 6 Jackson Hewitt stores in the Portland area.

I won't be able to go to nationals this year since we are starting the process of converting all our payroll clients to new software. I finally think we found a program that meets our needs. It's going to be a big job.

[sea-tax]

We were busy too. One more deadline on 10-15. Speaking of HD Vest I was at a chapter meeting today and a new member attended. What is interesting is he owns 6 Jackson Hewitt stores in the Portland area.

I won't be able to go to nationals this year since we are starting the process of converting all our payroll clients to new software. I finally think we found a program that meets our needs. It's going to be a big job.

So JH is now getting into the securities business , that is worse the H&R. I swear it is like HD Vest will take anybody these days.

What program did you finally settle on?

[veritas]

We asked if JH was getting into secuirties but he indicated the national company was not. He decided at a personal level to get involved.

We went with Adaptasoft for payroll.