:money_with_wings:S Corporation distributions are a way for owners to receive company profits
:chart_with_upwards_trend:Distributions are not considered wages and are taxed at a lower rate
:moneybag:S Corporation owners receive compensation through reasonable salaries and distributions
:heavy_dollar_sign:Distributions are subject to income tax but not employment taxes
:tax:Proper allocation of distributions is important to avoid IRS scrutiny
What are S Corporation distributions?
—S Corporation distributions are the profits and losses of the company that are passed on to the owners or shareholders.
How are S Corporation distributions taxed?
—Distributions are subject to income tax but not employment taxes.
What is the difference between distributions and reasonable salaries?
—Reasonable salaries are considered wages and are subject to income tax and employment taxes, while distributions are only subject to income tax.
Why are S Corporation distributions beneficial?
—Distributions allow owners to withdraw profits from the company at a lower tax rate, resulting in tax savings.
Is there a limit on how much can be taken in S Corporation distributions?
—There is no set rule for how much can be taken in distributions, but they must be allocated proportionally based on ownership stake.
00:00S Corporation distributions are one of the benefits of electing S Corporation status.
02:18Distributions are the company's profits and losses passed on to owners or shareholders.
05:58Owners must pay themselves a reasonable salary before receiving distributions.
07:00Distributions are taxed at a lower rate than wages.
08:06Proper allocation of distributions is important to avoid IRS scrutiny.
