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What does "Distributions Other Than Dividend Distributions"

What does "Distributions...

What does "Distributions Other Than Dividend Distributions" mean on a corporate tax return? Was the amount listed actually giving to the shareholder?

Accountant's Assistant: The Accountant will know how to help. Please tell me more, so we can help you best.

It is a line item on a S corp tax return I am looking at. I want to know if this means the shareholders took this money out of the company

Accountant's Assistant: Is there anything else important you think the Accountant should know?

I don't think so

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Answered in 16 minutes by:
11/6/2017
Chad EA, CFP ®
Chad EA, CFP ®, Enrolled Agent
Category: Tax
Satisfied Customers: 1,427
Experience: Federally licensed IRS Enrolled Agent, Certified Financial Planner (R), MBA
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W​elcome to JustAnswer! My name is ***** ***** I will be able to assist you today.

Distribution for an S Corp Under Sec. 1368, would be composed of cash or property.

S Corps as a pass through entity are required to distribute all earning at the end of the S Corps tax year.

The treatment of an S corporation distribution depends on the shareholder’s basis in his or her S corporation stock

Taxability of Distributions From S Corps. With No Accumulated E&P

Regs. Sec. 1.1368-1(c) provides that a distribution by an S corporation that has no accumulated E&P is taxed under a two-tier approach:

  1. First, the distribution is a tax-free reduction of the shareholder’s basis in the corporation’s stock; then
  2. Any distribution in excess of the shareholder’s stock basis is treated as gain from the sale or exchange of the underlying stock.

Q:Was the amount listed actually giving to the shareholder?

​A: The amount listed should reflect the amount actually given to the shareholder

From the information you have provided, the line item you are referring to would generally reflect the amount the shareholder took out, which is why the information would be listed.

I would be happy to take a look at the specific line if you are able to tell me the form and line you are looking at.

Thank you!

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Customer reply replied 3 months ago
Thank you. I just needed to know that this was an actual amount taken from the company. Is it a requirement that all profits be distributed to the shareholders? or can they leave it in the company, or loan it back to the company in the beginging of the next year?

W​ith an S Corp all profits must be distributed to the shareholders at the end of the tax year. If the company was previously a C Corp then you may have accumulated earnings and profits that have been retained, but that scenario is rare.

After the income is distributed to the shareholder and the shareholder pays the appropriate amount of tax, then the shareholder could lend the funds to S Corp at the beginning of the year.

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Customer reply replied 3 months ago
thank you so much. I now understand. I have not other questions at this time.

T​hank you for the question.

Have a great day and please let me know if you do have any follow ups.

Chad EA, CFP ®
Chad EA, CFP ®, Enrolled Agent
Category: Tax
Satisfied Customers: 1,427
Experience: Federally licensed IRS Enrolled Agent, Certified Financial Planner (R), MBA
Verified
Chad EA, CFP ® and 87 other Tax Specialists are ready to help you
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