Tax Guru – Ker$tetter Letter

Q:

Hi Kerry,

I have a quick question, I hope you have time to help me out.  My brother and I started a s-corp in the state of Washington last year, we do not have any employees.  It’s year end and we have around 60k in the bank, I’ve taken about 5k out of the corp and he has taken $0.00.    What would you recommend we do with the 60k?  I’m married and my wife and I made about 35K last year, my brother has made about 30k outside of the corp.  I know this is so last minute, but any insight would be so helpful.

Thanks in advance!!

A:

You really should be discussing this with your own personal tax advisor.  If you are actually trying to operate an S corp without a tax advisor, you are asking for big trouble. 

A tax pro will inform you that paying S corp money out to the shareholders will have no tax effect, and is something that should have been evaluated when you decided to become an S corp in the first place.

Good luck.

Kerry Kerstetter