I have an SCorp with excess distributions over basis. I know it goes to Sched D, but how is the Scorp balance sheet handled (AAA). Does it get adjusted for the taxed distribution?
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On the balance sheet ('books'), it does get adjusted by virtue of going negative. Once the S starts making profits again (assuming they do) then the fact that they had been previously taxed on some $$ will be adjusted out as a matter of course. (The negative number representing the amount already taxed).Originally posted by BOB W View Post
If by 'AAA', you're referring to the balance sheet on the 1120S, I believe that AAA can't be reduced beyond zero for property distributions. BUT the bottom line AAA # doesn't have to agree with the retained earnings number in the 1120S.
I think. It's been a while since I've run across this.
I hope this helps!
[PS: Check your mail] -
ALL distributions, taxed or not, are an M-2 adjustment of AAA, but only to the extent that they do not reduce AAA below zero. The taxability of distributions is not a circumstance reported on the 1120S.Originally posted by BOB W View PostComment
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How about....
.... the shareholder's outside basis? Can the 1120 or 1040 Shareholder Basis Reports show any "outside basis" on it.This post is for discussion purposes only and should be verified with other sources before actual use.
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Bob,
I've never thought about keeping track of the "outside" basis within the tax program. I use Lacerte which may allow me to do just that. To date, I've been tracking outside basis on a spreadsheet.Dave, EAComment
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New basis forms....
.... both 1120s and 1040 will lend itself to IRS level interpertions without "outside basis".
The 1120S will show its shareholder inside basis but the 1040 should show outside basis in addition to inside basis, what do you think?Last edited by BOB W; 02-22-2007, 06:55 PM.This post is for discussion purposes only and should be verified with other sources before actual use.
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Why Not.....
a S/H loan that will be repaid and then the s/h increase his basis throughout the year as well? Why take it as Capital gains instead of doing a s/t s/h loan, accruing interest and having the s/h return the money as well as reinstate his basis?
Just a thought mind you
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Sandysea..
.... I've been using loan TO officers for years along with interest computation, but with the shareholder basis requirement, both 1120S and 1040s, seems to put a different twist to continued handling it this way. I don't want any down the road issues to pop up for not including excess distribution as income to the shareholder, even if the excess is caused by a sect 179 asset that was financed, or other deductions that did not require a cash outlay.
I'm going to have to reconsider how Sect 179 is used when it generates net profit less the available distributable funds.This post is for discussion purposes only and should be verified with other sources before actual use.
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Tax bird
On the balance sheet ('books'), it does get adjusted by virtue of going negative. Once the S starts making profits again (assuming they do) then the fact that they had been previously taxed on some $$ will be adjusted out as a matter of course. (The negative number representing the amount already taxed).
If by 'AAA', you're referring to the balance sheet on the 1120S, I believe that AAA can't be reduced beyond zero for property distributions. BUT the bottom line AAA # doesn't have to agree with the retained earnings number in the 1120S.
I think. It's been a while since I've run across this.
I hope this helps!
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Taxbird> My AAA account is showing a higher negative figure than what will be taxed because of the Capital contribution basis being used toward the excess distribution . Is this a mute issue?Last edited by BOB W; 02-21-2007, 06:59 PM.This post is for discussion purposes only and should be verified with other sources before actual use.
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