Tax Guru – Ker$tetter Letter

Helping real people win the tax game.

  • Enter your email address to subscribe to this blog and receive notifications of new posts by email.

    Join 681 other followers

  • Blog Stats

    • 309,881 hits
  • Posts By Day

    October 2008
    M T W T F S S
     12345
    6789101112
    13141516171819
    20212223242526
    2728293031  
  • Subscribe

  • Special Pages

S Corp Payments

Posted by taxguru on October 26, 2008

Q:

Subject:  S corp’s

Hi I just found your site and read about S vs C Corp’s.  We have been an S Corp for years.  Some questions I have is:  money taken out by shareholder ( my wife and I) should that be ledgered under personal income or shareholder loans?  Is that money taxable?  My CPA says it is not taxable.  Why would I ever pay myself in wage form if this is the case.  I see as our profits get up to 65,000 or more maybe we should start a C Corp.  How so you smooth out the money in a C Corp.  I don’t understand.  Maybe I should get a new CPA? 

Thanks

 

 

A:

 

If you’ve been operating an S corp for any period of time and your professional tax advisor hasn’t explained to you all of the details of how cash distributions are treated, it does sound like s/he has dropped the ball.  That all should have been explained to you prior to your even setting up the S corp.

Likewise, if your professional tax advisor isn’t aware of how to effectively utilize a C corp to smooth out your taxable income, it is time to find someone who understands this very basic tool of tax planning.

Good luck.

Kerry Kerstetter

 

 

 

 

 

 

Sorry, the comment form is closed at this time.

 
%d bloggers like this: