S-Corp basis

[ibmman]

Hello,

In 1997 thru 2002 I had a S-Corp. during years I contributed a good amount to charity. I am going through a IRS personal audit for 2003 and they claiming I did not have basis in the corporation to give charity.

During 1997 thru 2000 the company was profitable, BUT I gave alot to charity through the corporation, thus the charity contributions were carried over to my personal return since the corp was a s-corp.

Can anyone shed light into the matter?

Much thanks in advanced for this!

[BOB W]

Hello,

In 1997 thru 2002 I had a S-Corp. during years I contributed a good amount to charity. I am going through a IRS personal audit for 2003 and they claiming I did not have basis in the corporation to give charity.

During 1997 thru 2000 the company was profitable, BUT I gave alot to charity through the corporation, thus the charity contributions were carried over to my personal return since the corp was a s-corp.

Can anyone shed light into the matter?

Much thanks in advanced for this!

Being a pass through entity, distributions in excess of basis becomes taxable income. Because some of your distribution was earmarked as a charitable contribution, does not change the fact that they were distributions.

Is the auditor trying to also say that you have additional income? Or is he saying that one voids out the other?

[veritas]

You need to hire

a qualified representative. Either an Enrolled Agent or a CPA.

[ibmman]

re: S

Thank you for your reply.

From my understanding the auditor is saying that I did not have basis. I have not provided the auditor my S-Corp returns, so the auditor decided to reconstruct the S-Corp return. I will be providing the S-Corp return to the auditor in a few days. Since this is a personal audit, does the S-Corp play a role in the audit? Is it advisable that I provide the S-Corp return to auditor?

Again, thank you for your help.

Being a pass through entity, distributions in excess of basis becomes taxable income. Because some of your distribution was earmarked as a charitable contribution, does not change the fact that they were distributions.

Is the auditor trying to also say that you have additional income? Or is he saying that one voids out the other?

[BOB W]

Your questions goes beyond the purpose of this board. You should contact a tax professional, EA or CPA, in your area. Any answer given here would be negligence without a review of the Corporate return.

You're "winging it" without representation may cost you many more dollars than to seek local advice.