Hello my name is wayne Lippmann I'm a CPA in Northern California I've been practicing individual tax planning and corporate and business tax planning for the last 35 years I was formerly a partner at the firm of Price Waterhouse in San Francisco I currently have a smaller firm in Walnut Creek California today's discussion will be taking money out of an S corporation the three ways of taking money from an S corporation would be one through wages or bonuses number two through distributions or three via loans the first area of taking money from an S corporation would be wages or bonus in terms of wages that would be paid with payroll taxes would be required to be paid both by the S Corp as the employer Social Security tax and also the employee share of Social Security tax the wages should be reasonable the IRS typically says that S corporations that pay very little or no wages is unreasonable and they allocate part of the profits of the S corporation as wages so it's highly recommended that S corporations pay wages to a reasonable amount my experience it's discussed a lot by practitioners in academics but you don't see a lot of audits relating to this issue the second area besides wages is to make distributions from the S corporations a distribution from an S corporation is typically tax-free as long as the distribution doesn't exceed the individual or shareholders basis in the S corporation if the distribution exceeds the shareholders basis the S corporation it would be taxed to the individual as long-term capital gain if it's not does not exceed the basis which is typically the answer it's a tax-free distribution and the reason for that is the profits of the S Corp is already...
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S corporation taxes Form: What You Should Know
Form 1099-L — Business Income Tax Return from a Small Business (Non-Profits, Business Income) Do NOT send your business' 1099-L to your corporate income tax return, it will not be accepted. Send S corporation 1099 to IRS, not to the corporate income tax return. S corporation 1099-L Business Income Tax Return (Form 1120-S/ 1099-MISC) To obtain Form 1099-MISC for your S corporation, send to the California Franchise Tax Board: 1099-MISC: Tax Return of a Small Business or Business Entity S corporation 1099-MISC Business Income Tax Return (Form 1120-S/ 1099-MISC) Send Form 1099-MISC to the IRS. DO NOT send to your Corporate Income Tax Return. The Form 1099-MISC is for the tax year that a corporation is formed in this state. The Form 1099-MISC will determine the amount due on an individual's return. Tax Return — IRS Form 50-MISC — License and Franchise Tax Certificate If you have no S corporation, but still have a lease agreement for a property, you will need to file a Form 50-MISC. You can obtain a Form 50-MISC from the California Department of Industrial Relations. You can also obtain Form 50-MISC from the tax department if there is an S Corporation. The Form 50-MISC gives the location and name of the S corporation. If you have only one business with one entity, you can obtain a document titled, “Application for the License and Permit,” from your Department of Industrial Relations or you can obtain a Form 50-MISC from the California Department of Industrial Relations. Tax Return — DMV S corporation Business Franchise Tax Statement S corporation Franchise Tax Statement (Form 50-MISC) If an S corporation has a business income, then a Franchise Tax Statement must be filed. An S corporation Franchise Tax Statement is a summary form of the Franchise Tax. The Form 50-MISC is the actual Franchise Tax. The Franchise Tax Statement is a summary. The business Franchise Tax Statement details the business. The purpose for S corporation tax payments is to allow the Franchise Tax Director to get an accurate picture of a business in the state of California.
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