Welcome Guest. Register Now!  



Reply
 
LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 04-15-2013, 01:25 AM
Junior Member
 
Join Date: Apr 2013
Posts: 3
S-Corp tax question

I have an LLC that is taxed as an S-Corporation. There are 2 shareholders, my father (2.1%) and me(97.9%).
I own a commercial fishing boat that I have another individual (non-shareholder) operate.
He does almost all the work (1000+ hours per year) and all the money goes through the LLC.
I do not materially participate according to the guidelines, neither does my father (He does no work at all).
I work about 240 hours per year for which the LLC pays me a wage. I have a W2 for the wage I pay myself.
During the year, I take profits out of the business and at the end of the year, there are still more profits to take.
So last year I was pulling out about 3000 per month, and at the end of the year there was still about 12,000 profit left in the business account.
How do I record this on my schedule K1 (Form 1120S)?



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #2 (permalink)  
Old 04-15-2013, 03:48 AM
Moderator
 
Join Date: Oct 2010
Posts: 5,258
“How do I record this on my schedule K1 (Form 1120S)?”===============> An S-corp is a "flow-through" entity which means you, as a SH/EE, pay taxes on your pro rata share(97.9%) of the S-corp's income reported on 1120S line 21, regardless of whether the income is actually distributed to you. This income is considered investment income, and self-employment taxes are not imposed. However, you, as a shareholder/EE that works for the S-corp, may(possibly/probably) be required to receive wages reported on 1120S line 8 as an EE of the corp. The distribution of $36K reduce your basis in the S corp in AAA acct and stock/loan basis. All distributions are considered to be a return of basis /capital in the shareholder’s stock. So any distributions up to the amount of basis are nontaxable. Anything over the basis is a capital gain and need to be reported on SCh d/form8949.SO, Distributions do NOT go on Line 1 of either K or K-1, nor does it go on BOTH lines 2 AND 7 of the M-2 - though it does go on Line 7 of the M-2.n Sch k1 of 1120S line 1 PART 3, you need to report 97.9% of the ordinary biz income(loss) reported on 1120S line 21 .The remaining profit of $12K is added to your basis in AAA and stock basis.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
Ads
Reply



Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
New S Corp Question - Pls Help maxmax78 S-Corporation 3 12-04-2011 04:21 PM
Question-Life Ins on C-Corp drstn12 C-Corporation 2 04-12-2011 04:18 PM
Another NJ S-Corp question NewGuy30 S-Corporation 0 04-02-2009 05:21 PM
S-Corp Estimated Tax Question greyuser S-Corporation 1 02-04-2009 10:32 AM
S Corp 2 owners tax question mike scott S-Corporation 0 12-11-2008 12:23 AM

Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 
Individual
 » Income
 » IRA/Sep
 » Medical
 
Corporations
 » Payroll
 
Forum for CPAs
 
Financial Planning
 
 
 

» Recent Tax Q&A
No Threads to Display.