I dont understand how an S-corp would have double taxation if drawing over basis. The Scorp is a flow through so all profit is taxed regardless. If my basis is 10k (I invest 10k in business) and the scorp profits 100k, and I take out 110k, im still being taxed on 100k profit.
Thanks for the awesome video. If I have a S corp and have profit, Can the single shareowner take loan out of S corp and pay the S corp with reasonable interest each year? By doing that, the shareowner does not need to pay tax on those profit sitting in S corp.
What should you do and how do you complete IRS Form 7203 if you have negative Retained Earnings of $ 70,000+ and it's all from cumulative operating losses over a number of years and none of it was distributions to shareholder and there is only 1 S-corp shareholder? If those losses were written off as they occurred and not suspended does that mean that $ 70,000+ now needs to be recognized as a long-term capital gain or something?
On the 1120-s Schedule M-2, are Line 2 (balance at beginning of tax year) and Line 8 (balance at the end of tax year) the company basis at the beginning and end year? In other words, the company balance is the same as the basis? And if there are multiple shareholders, then their basis is whatever percentage they own from the company balance/basis?
SM-LLC S-Corp 1. Are owners draw / distributions (outside payroll) taxable as ordinary income or capital gains? 2. Does the 40k profit outside of salary taxation differ if its retained in the S-corp vs it being distributed to me? Example: I contribute 10k to S-corp. S-corps net income for year is 100k. I am paid a 60k salary. How is the 40k profit treated?
Here’s my understanding: 1. Only taxable as capital gains if it exceeds shareholder basis. 2. You will pay income tax on the total $100k, whether you leave it in RE or not, but the $40k won’t be subject to FICA--which is one of the main reasons to form an S-Corp)
I purchased a hair salon in 2019 and entity was setup as SCorp. Since 2019 is the first year I purchased this business, would the beginning basis be 0$ for the first K1 on my personal tax return?
I've listened to numerous videos trying to understand Basis, and ONLY you explained it rationally. You're the MVP 🏆🏆
Thank you for explaining this clearly. The spreadsheet showing how to calculate basis helped a lot. It was not boring.
really not boring considering my month long headache about how to do this LOL
Definitely not boring
Great video. The illustrations were very clear and explained very well. Now I have a better understanding of basis. Thank you!!🙏🏾
Excellent video, honestly a better explanation than a lot of what the CPA review courses are providing.
Excellent video, feeling much more educated. Thank you.
Thank you for sharing this information , very well explained and thanks again for the time you take to do these videos .👍👍👍
Thank you best explanation ever !! You are the best 👍🏻
If the company was an llc the previous year but switched to an s corp for the new calendar year, will the stock basis be zero for that year?
Great vid.
This was SO HELPFUL!!
Not boring, thanks so much!
Great video! Thanks so much!
Great video. Thanks.
Very helpful
What if i contributed to the SCorp with 3rd party loans and a SBA loan, do theae count as basis?
I dont understand how an S-corp would have double taxation if drawing over basis. The Scorp is a flow through so all profit is taxed regardless. If my basis is 10k (I invest 10k in business) and the scorp profits 100k, and I take out 110k, im still being taxed on 100k profit.
Thanks for the awesome video. If I have a S corp and have profit, Can the single shareowner take loan out of S corp and pay the S corp with reasonable interest each year? By doing that, the shareowner does not need to pay tax on those profit sitting in S corp.
What should you do and how do you complete IRS Form 7203 if you have negative Retained Earnings of $ 70,000+ and it's all from cumulative operating losses over a number of years and none of it was distributions to shareholder and there is only 1 S-corp shareholder? If those losses were written off as they occurred and not suspended does that mean that $ 70,000+ now needs to be recognized as a long-term capital gain or something?
On the 1120-s Schedule M-2, are Line 2 (balance at beginning of tax year) and Line 8 (balance at the end of tax year) the company basis at the beginning and end year? In other words, the company balance is the same as the basis? And if there are multiple shareholders, then their basis is whatever percentage they own from the company balance/basis?
What software are you using to monitor basis?
Where does income fit into your table? Doesn't money earned from selling your product get added to basis?
Ok so how do i increase my basis if i start with nothing but making money now in my business?
Thank you
When S Corp converting to C Corp, what to do with the suspended loss in the final K1?
Thanks
SM-LLC S-Corp
1. Are owners draw / distributions (outside payroll) taxable as ordinary income or capital gains?
2. Does the 40k profit outside of salary taxation differ if its retained in the S-corp vs it being distributed to me?
Example: I contribute 10k to S-corp. S-corps net income for year is 100k. I am paid a 60k salary. How is the 40k profit treated?
Here’s my understanding:
1. Only taxable as capital gains if it exceeds shareholder basis.
2. You will pay income tax on the total $100k, whether you leave it in RE or not, but the $40k won’t be subject to FICA--which is one of the main reasons to form an S-Corp)
Is it short term capita gain?
Hello Halon Tax, is it possible to share the excel spreadsheet?
I purchased a hair salon in 2019 and entity was setup as SCorp. Since 2019 is the first year I purchased this business, would the beginning basis be 0$ for the first K1 on my personal tax return?
You basis would be the purchase price plus any debt you incurred. Google stock/debt basis form for s-corp
Don't take more than you make. boom summary. lol jk great vid