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  • S Corp shareholder tax question

    Hi all,

    I have a quick question. I am a new attending (paid on W-2), but we are also eligible to be shareholder's in my department's outpatient practice. I usually do my own taxes but this will be the last year I will be doing that. I completely forgot that in December 2016, I did purchase my first share and must have received?/lost? the K-1 at some point. Anyway, I filled out the appropriate boxes in TaxAct based on the K-1 I finally got, but my question is this: I gave a check for 500$ for 1 share and received a dividend payment of 1200$ in December. Is this 500$ deductible? The K-1 does not include the 500$ anywhere; this is what it includes:

    Box 1: 345, Box 11: 8 Box 15A: -37 Box 16: 1200

    I know it's a measly amount and it doesn't really matter if I mess this up, but if someone could help, I would appreciate it. Like I said, I won't be doing next year's taxes because I have no clue what I'm doing and 2017's numbers would obviously be higher. And yes I know I have been procrastinating...

    Thanks in advance for your help!

     

  • #2
    No, the $500 is not deductible. I would expect it to show up in section L as your capital contribution.

    Disclosure: I am not a tax professional. This is where it shows up for me.

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    • #3




      Hi all,

      I have a quick question. I am a new attending (paid on W-2), but we are also eligible to be shareholder’s in my department’s outpatient practice. I usually do my own taxes but this will be the last year I will be doing that. I completely forgot that in December 2016, I did purchase my first share and must have received?/lost? the K-1 at some point. Anyway, I filled out the appropriate boxes in TaxAct based on the K-1 I finally got, but my question is this: I gave a check for 500$ for 1 share and received a dividend payment of 1200$ in December. Is this 500$ deductible? The K-1 does not include the 500$ anywhere; this is what it includes:

      Box 1: 345, Box 11: 8 Box 15A: -37 Box 16: 1200

      I know it’s a measly amount and it doesn’t really matter if I mess this up, but if someone could help, I would appreciate it. Like I said, I won’t be doing next year’s taxes because I have no clue what I’m doing and 2017’s numbers would obviously be higher. And yes I know I have been procrastinating…
      Click to expand...


      The $500 is not deductible. It is your "basis" for the share you purchased. If and when you sell or relinquish your ownership share, the basis of $500 will either reduce your gain or increase your loss. As you report income from the business and pay taxes on it, that will increase your basis.

      I agree that you should find professional help going forward. The basis calculation for S-corp owners can be rather complicated. The software used to prepare the corporate tax return, including your K1s, typically calculates your continuing basis annually, but you (not the corporation) are responsible for keeping track of your own basis and ensuring the calculation is accurate.
      Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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      • #4
        Thank you both for your replies - much appreciated! Yes Johanna, I think it's time to outsource this particular task.

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