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Established Community Backer ***

Re: "My husband and I are the shareholders of the S-Corp, and...

@rkumar1

 

Distributions from S corps, and Draws from LLC or Sold Proprietorships, are not the tax reporting event. This money out is not part of the 1040 reporting; the Entity has its own tax form that is passed to the 1040, and the Taking of money or not is not part of that reporting on the 1040, unless it Exceeds the owner's basis in the entity, which means they took More than they were entitled to = that might be taxable to the person taking the funds. Taking as distribution or draw, in and of itself, is not a taxable event; taking or not taking doesn't change the tax reporting for that entity, excluding taking more than Basis.

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