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JKCPA
JKCPA, CPA
Category: Tax
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Experience:  CPA with tax experience.
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in 2006 I was part of a corporation that was a sub chapter

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in 2006 I was part of a corporation that was a sub chapter S. In 2006 my share of the pass through was 143,000 dollars. The company paid 31,000 dollars to the treasury department for taxes. In 2006 a Judge awarded my shares of the stock to her to pay a 75,000 dollar that i supposedly did not pay. ( long and short i paid it, judge saw it differently. awarded 75,000 dollars and she could sell the stock and any distributions i received for the stock would count towards paying the 75,000 dollars. ) I was to receive any monies over 75,000 dollars. Is not the 143,000 dollars a distrubition of profits of the S corporation? I do not recall how this works....in a Sub Chapter S is not the 143,000 dollars mine and I can draw down on it as i wish when the company has funds?
Submitted: 4 years ago.
Category: Tax
Expert:  JKCPA replied 4 years ago.
Hello,

Thanks for your question.

In an S-corp, all items of income and loss are allocated to each shareholder according to their stock ownership %. You should receive a Schedule K-1 for each year you were a shareholder. This Schedule K-1 reports any income/loss amounts that were allocated to you. So in 2006, when you had a $143,000 gain, you probably reported that on your Form 1040.

Just because you were allocated the income of the S-corp does not mean you actually received it. So if you never received the $143,000 and you want to receive it, you will need to request a distribution from the S-corp from your shareholder capital account. Distributions are tax free to the extent of your adjusted basis in the stock. If the amount distributed exceeds your basis, then the excess is treated as a gain from the sale of property.

So your ex-wife, I presume, could request a distribution and you could each request one for the amount of capital you each presently have in the S-corp.

Hope this helps. Let me know if you have any other questions.
Best regards,

Edited by JK_CPA on 11/2/2009 at 12:56 AM EST
JKCPA, CPA
Category: Tax
Satisfied Customers: 5726
Experience: CPA with tax experience.
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