- quote -

Thanks for the info. I will recheck my assumption of 5
years.

- quote -

Thanks again.

--
Vic Roberts
Replace xxx with vdr in e-mail address.

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

- quote -

I do recall now your telling about your situation once upon
a time. I also agree that sub s is not the best route for
everybody.

- quote -

Don't think you have to wait five years however. That
applies only as a limit for becoming an S corp again and
subsequent to a termination.

Hang in there,

ChEAr$,
Harlan Lunsford, EA n LA
24 Mar 2005

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

Victor Roberts wrote:

- quote -

*nod*nod* If I were to be eligible to be an owner, and were
an owner, any form of organization other than a PSC-taxable
C-corp would bump my tax burden way up, and an S-corp would
make my boss' situation worse, too.

Phoebe

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

- quote -

Harlan - I do thank you for this information, but in my
particular family situation, which I agree is not typical,
and I also do not wish to discuss in a public forum :-) the
pre-tax benefits available to corporate officers of C Corps
but not to S Corps more than offset the fact that all my
income from the corporation is paid as salary subject to
FICA and Medicare.

Once I have been incorporated for the minimum period - 5
years I believe - I will evaluate my personal situation and
decide if I should convert to an S Corp.

--
Vic Roberts
Replace xxx with vdr in e-mail address.

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

Victor Roberts wrote:
- quote -

Vic, it's because of that PSC trap that I chose the S
corporation route. Not all profits have to be salary, and
the rest escape social security tax. UTOPIA. the best of
all possible worlds. Or is that Candide? The "More" I
think about it, the better Jean Jacques Rousseau sounds.

ChEAr$,
Harlan Lunsford, EA n LA
Sun 20 Mar 2005

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

Katie wrote:
- quote -

Then I amend my response. Substitute the word
"distribution" vice "dividend". Still a reduction in
retained earnings.

ChEAr$,
Harlan Lunsford, EA n LA
Sun 20 Mar 2005

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

Frederick Jorden <knowtax[at]bigfoot.com> wrote:
- quote -

Ah, don't worry about that. The IRS tries to label things as
ex post facto dividends all the time. You don't seem then
worrying about it, do you?

Stu

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

Frederick Jorden <knowtax[at]bigfoot.com> wrote:
- quote -

There were no dividends, ex post facto or otherwise. No need
for a lawyer.

--
Vic Roberts
Replace xxx with vdr in e-mail address.

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

Harlan Lunsford wrote:
- quote -

Harlan, I don't think this works. S corporations don't
"declare dividends" (unless they have undistributed C
corporation E&P).

The $200, if deducted as an expense by the corporation,
would reduce the net income flowing through to the
stockholder on the K-1. Which is not allowable. Instead of
deducting it as an expense, the corporation should
reclassify that amount as a receivable, "due from
stockholder," and at some point the stockholder should
reimburse the corporation.

Katie in San Diego

The foregoing is intended for educational purposes only and
does not constitute legal or professional advice.

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

Harlan Lunsford wrote:
- quote -

Ex post facto dividends make me nervous. Time to talk to a
lawyer.

--
Frederick E. Jorden http://Tax-Accounting-Payroll.com
7825 Midlothian Tpk - 207 Richmond, VA 23235-5247
EMAIL knowtax[at]bigfoot.com
(804) 320-6210 FAX (804) 320-6211

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

Harlan Lunsford <hlunsford[at]bellsouth.net> wrote:
- quote -

Then I would have to show a profit somewhere along the line
to pay these dividends. I am a personal service corporation
and profits get taxed at 35%. Since I am the only employee I
have very little profit each year by design. A bit more than
enough to cover the 50% non-deductible portion of Meals -
since I also have to pay taxes on the profit used to pay the
non-deductible meals.

--
Vic Roberts
Replace xxx with vdr in e-mail address.

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

Victor Roberts wrote:
- quote -

Well, now, let's see. What IF you regularly paid minor
personal items as a convenience, and then at year's end
instead of reimbursing the corporation, declared the total
as a dividend which may be taxable at low rates?

ChEAr$,
Harlan Lunsford, EA n LA
Sun 13 Mar 2005

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

Craig wrote:

- quote -

That's in effect what the 200$ was, a "withdrawal".

Where does it show? on schedule M-1, provided you even need
to fill that out. Look at instructions to learn when you may
safely omit doing that. One of the questions on page two, if
answered "no", obviates the need for schedule M-1.

ChEAr$,
Harlan Lunsford, EA n LA
Sat 12 Mar 2005

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

Craig" <craig_koster[at]yahoo.com> wrote:

- quote -

On those rare occasions when I make a "mixed" purchase from
a vendor and therefore have a personal expense on my
business credit card the personal portion of the charge is
expensed to an employee reimbursement account on my books.
(I am a C Corp.) At various times during the year, and on
December 31 I clear the reimbursement account with a check
from me to the company. The personal charges never show up
on the 1120 as the company has been fully reimbursed.

--
Vic Roberts
Replace xxx with vdr in e-mail address.

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

I'm trying to finish up the 1120S for my wife's business and
have a question: we both have corporate AMEX cards for our
business and early on we were a little sloppy and charged
some personal items to the card. I then paid off the card
balance every month with a business check.

My question is how do I go about balancing this in my books
and 1120S. I know I can't deduct the personal items as a
business expense (even though I paid them with business
money). Basically I have:

AMEX BILL:
Business: $800
Personal: $200

Paid: $1,000 with business check

1120S Line 19 Attached Schedule:
Total Deductions: $800

Which leaves my 1120S and books out of balance because of
the $200 personal stuff.

Do I just consider the $200 a draw or dividend to the owner?
Where does this show on the 1120S (if anywhere)?

Any help is much appreciated.

P.S. - please no lectures on separating business & personal
expenses - I know how bad that is and we've stopped doing it
- just got a bit sloppy for a couple months :-/

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->