S Corporation Shareholders and Disproportionate Distributions
What is a “disproportionate distribution?” A distribution made to a shareholder not in direct proportion to their stock ownership percentage. This is a very important issue: FAILURE TO MAKE DISTRIBUTIONS IN PROPORTION TO OWNERSHIP PERCENTAGE CAN VOID THE S CORPORATION ELECTION. Why is this? Because the IRS considers disproportionate distributions as evidence that the company [...]
S Corporation Compensation Pitfall
The federal budget deficit is projected to reach a record of $1.5 trillion in 2011 due to the weak economy, higher government spending, and new tax cuts. That being said, the government has to make up the deficit somewhere – and looking to existing tax laws is going to be a favorite place for the [...]
