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Question

If one owner owns two companies, can he tranfer money between the two companies or does he have to pay tax on the money transfered. For expample. Company A is strong and making good money, Company B is just starting up. So the owner transfers money from A to B from time to time to help cover expenses. Is that money taxable?

Submitted: 362 days and 10 hours ago.

Category: Finance

Value: $9

Status: AWAITING CUSTOMER ACTION

Chicago, Illinois

Already Tried:
nothing

Posted by Lev 362 days and 10 hours ago.

Info Request

How are these companies organized? Are they LLCs? C-corporations? S-corporations? other?

362 days and 10 hours ago.

Reply

S-Corporations in Chicago

Answer

Two options -if S-corporation has no Earnings and Profits during tax year or had Earnings and/or Profits.

No Earnings and Profits - distributions are applied against basis of the shareholder's share - the amount in excess of the basis is treated as gain from the sale or exchange of property.
With Earnings and Profits - the portion of the distribution not to exceed the accumulated adjustments account (AAA) is treated the same as the S Corporation having no earnings and profits - see above. The portion of the distribution in exceed of the AAA up to the amount of the accumulated earnings and profits is treated as dividends. And the rest is treated the same as the S Corporation having no earnings and profits
See for reference - http://www.law.cornell.edu/uscode/uscode26/usc_sec_26_00001368----000-.html

Expert:	Lev
Pos. Feedback:	99.1 %
Accepts:	1001
Answered:	3/23/2009

Tax Preparer

Personal Investment, Tax Preparation

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