schirallicpa Posted December 1, 2023 Report Share Posted December 1, 2023 I feel like I'm doing this wrong. C corp. 1 shareholder. Not my client - or I would have had him become an S corp years ago. Sold assets and closing corp. Tax preparer of past wants to distribute dividends. I'm not sure. I think this is liquidating distributions and dividends maybe should have been paid in the past. But it's all done, and I have been asked to prepare final return. TP gets: Cash and Note totaling: 202278. His stock and APIC total: 62600 Unappropriated RE totals: 101291 He has personal gain on 1040: 38387 ?? Am I off the rails and clueless here? Blind leading the blind? Please be gentle with me.... Quote Link to comment Share on other sites More sharing options...
kathyc2 Posted December 2, 2023 Report Share Posted December 2, 2023 Been a while since I've had a C, but I think he has taxable income of 139,678, which is the 202,278 received less basis of 62,600. 1 Quote Link to comment Share on other sites More sharing options...
schirallicpa Posted December 4, 2023 Author Report Share Posted December 4, 2023 Yeah - I think so. Over the weekend I read that the retained earnings doesn't come into play. Quote Link to comment Share on other sites More sharing options...
DANRVAN Posted December 4, 2023 Report Share Posted December 4, 2023 On 12/1/2023 at 4:56 PM, kathyc2 said: received less basis of 62,600. That is correct, assuming he was the original sole owner of the stock and did not aquire through purchase, inheritance or gift. 1 hour ago, schirallicpa said: retained earnings doesn't come into play. That is correct. Since the C-corp is a separate taxable entity, retained earnings do not change basis and are subject to double taxation. His basis equals his investment; internal transactions do not change it with a C corp. 3 Quote Link to comment Share on other sites More sharing options...
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