Seth Breidbart wrote:
- quote -

Remember of course that each shareholder's basis has to be
continually updated and computed.

Say the S corp has two shareholders ( I have such a client)
50/50 ownership, yet one wants to donate 1000$ to HIS
church, and his "partner" wants to donate only 100$ to HIS
church. Since the corporation can't take a deduction for
1100$, it's a pass through item to each according to his
means; and basis.

ChEAr$,
Harlan

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Seth Breidbart wrote:

- quote -

You have losses in excess of basis, which are suspended
until you get basis.

- quote -

It most certainly is a taxable event. You have a
distribution in excess of basis.

- quote -

You don't get basis for the S-corp's debt, regardless of
whether you co-sign. The only way to get basis is for you
to personally borrow the money, then loan it to the S-corp.
You then have Sch B interest income from the corp, and Sch E
pg2 interest expense, in addition to the normal pass-through
stuff.

Phoebe

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- quote -

I start an S corp with $100. It borrows $5,000 from a bank.
It uses $1,000 to make a charitable contribution.

Are you saying that I don't get the tax benefit? Why not?

If the corp hands me the $1,000 and I donate it, then I do
(and the "handing me the $1,000" isn't a taxable event).

Does it matter whether I cosign the loan (that is, is the
limitation "at risk" rather than "basis")?

Seth

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"Joe Btfsplk" <taxxcpa[at]sbcglobal.net> wrote:
- quote -

The point isn't whether it's deductible, but how much is.
For things like depreciation the S-corporation shareholder
is limited in his deductions to his basis in the stock. I
was curious whether that rule would also apply to charitable
deductions.

Stu

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"Stuart A. Bronstein" <spamtrap[at]lexregia.com> wrote:
- quote -

I think it would be deductible as a pass-thru item the same
as if he had borrowed the money from the bank, then donated
it. It might reduce his basis, but I don't think the basis
reduction would make it non-deductible on his Schedule A.

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Stuart A. Bronstein wrote:
- quote -

There's always a possible fly in the ointment, and Stu has
identified it. Didn't occur to me, since ALL my S
corporations are profitable, year after year, and
shareholders never make charitable contributions unless they
have profits.

But yes, such might not eventually be deductible on schedule
a subject to shareholder's less than zero basis.

ChEAr$,
Harlan Lunsford, EA n LA

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Stuart A. Bronstein <spamtrap[at]lexregia.com> wrote:
- quote -

I don't see why there would be, since the donation is still
income to the shareholder (that is, whatever income caused
the money to be in the corp's bank account so it could make
the donation is equally income whether it was donated or
handed to the shareholder).

Seth

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- quote -

It doesn't make any difference whether the check is written
by you personally or by the corporation.

If the corporation makes the donation, it will show up on
your K-1 as a charitable donation. You will then include it
on your 1040, Schedule A.

If the corporation writes a check to you, it will show up as
a distribution to you on the K-1. Then when you write the
check to the charity, you'll inculde it on your 1040,
Schedule A.

Same result either way.

Hope this helps.
Karen Moore, CPA
Illinois

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

Is there a limitation on this kind of deduction, e.g. the
shareholder's basis in his stock?

Stu

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Because S-Corp income flows directly to you as personal
income, the S-Corp itself pays no taxes; the shareholders
pay the taxes on all income generated by the S-Corp. Why
not just write the check business-to-self, and then make the
contribution to charity by way of personal check? That way,
it's easy to enter it on your 1040.

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"Richard Piasecki" <usenet2[at]ogoent.com> wrote

- quote -

The "S" corporatiojn can pay the charitable contribution.
Charitable contributions are not an expense of the business,
but flow through on the K-1 to your personal return to be
taken on Schedule A.

- quote -

If you can itemize your deductions, and there are no AGI
limitations, the amount will be taken on Schedule A.

- quote -

It doesn't matter, as the company ian't taking the
deduction, you will.

You should be, as you know, asking your business accountant
(CPA or EA) about this.

--
Paul Thomas, CPA
paulthomascpapc[at]bellsouth.net

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Richard Piasecki wrote:

- quote -

Either way is fine. If the corporation makes the donation,
AND provided of course that the organization qualifies for
the donation being a charitable contribution, the amount is
what's known as a "pass through" item, and will then appear
on your schedule k-1 thus allowing you to include the amount
on your own schedule a.

ChEAr$,
Harlan Lunsford, EA n LA

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Greetings.

I am the sole shareholder for a Subchapter S corporation I
started several years ago for my business. I have a
substantial amount of money in my business bank account
earmarked for a charitable donation. Obviously, I need to
make this donation before the end of the year.

My question is, can I write the check directly from the
business bank account or do I have to first transfer the
money to my personal account?

I want to ensure that the entire donation is tax deductible
and I'm not sure that that will happen if the donation is
made by the business instead of directly by me. I would
prefer to have the business donate the money. I'm just
looking for confirmation that I won't run afoul of the IRS
if I do that. If it matters, the donation is 10% of the
gross business income for the year.

I thank you for reading this and for your response.

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