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Tax.appeal.168
Tax.appeal.168, Tax Accountant
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I have a small S Corporation of which I am 100%

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For taxes, I have a small S Corporation of which I am 100% stockholder, and a Sole Proprietorship. I did not pay myself any dividends for the year, but did write myself checks that went into my Sole Proprietor business bank account. My S corp made approximately
17,000 gross profit, and I paid 13,000 to my sole proprietor bank account which I use to draw cash and personal salary. How do I report the 13,000 written to my sole proprietorship on my SCorp Schedule K-1?
Submitted: 1 year ago.
Category: Tax
Expert:  Tax.appeal.168 replied 1 year ago.
Hello. Thank you for choosing this question and answer service today. My name is Angela. I will be assisting you.
Q: How do I report the 13,000 written to my sole proprietorship on my SCorp Schedule K-1?
A: You're not supposed to manually record anything directly on the Schedule K-1. That information is transferred from the Form 1120-S. For the sake of preparing the tax return, you can record that $13,000 on Line 8 of the Form 1120-S. However, it is very likely that you will be receiving a letter from the IRS regarding the matter.
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Respectfully, ***** ***** first mention that as an S-corp, you should be paying yourself a salary and not taking draws. SEE BELOW:
The Internal Revenue Code establishes that any officer of a corporation, including S corporations, is an employee of the corporation for federal employment tax purposes. S corporations should not attempt to avoid paying employment taxes by having their officers treat their compensation as cash distributions, payments of personal expenses, and/or loans rather than as wages.
REFERENCE SOURCE:
http://www.irs.gov/uac/Wage-Compensation-for-S-Corporation-Officers
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Regarding the sole proprietorship, I take it that is a totally different business venture from the S-Corp.
As for reporting the payments that were deposited into your sole proprietorship account from the S-Corp, the IRS is going to frown on that.
Let me know if I can be of further assistance to you regarding this matter.