TAXMANROG CPA ONLY……………………………………………………..
This reduction is the source of the distribution in excess of basis, currently. Shareholders realize the only possible option for them, maybe, is to defer the tax
to some future date.
The Shareholders are concerned that the Corporation is not allowed to reclassify the Corporate Supply expense from Shareholder Distribution to Shareholder Accounts Receivable. The answers to these questions will help them decide….
1. If shareholders take Cash Distributions is excess basis, does the IRS allow the Shareholders to reclassify the Cash Distribution to Shareholders Receivable to defer the distribution in excess of basis? Why would the IRS allow this? Is this a common Practice?
2. It appears this is highly unusual tax accounting puzzle that does not fit into any mechanical tax accounting remedy. The unusual way of viewing the Shareholder paying the first tax etc., is too justify maybe being able to Reclassify Supply Shareholder distribution to Shareholder Receivable. Is there anything in tax law
that would prohibit the reclassification of Supply Shareholder distribution to Shareholder Accounts Receivables?
If the IRS allows Shareholders to take cash out of an S-Corporation as a shareholders Accounts Receivable Loan, and defer Capital Gain tax, without question and being normal, this may rationalize the Supply Shareholder’s Distribution reclass to Shareholders Accounts Receivable?
I found Judge Learned Hand….very interesting man/quotes
Have a Good Night