Skip to content
×
Pro Members Get
Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
ANNUAL Save 54%
$32.50 /mo
$390 billed annualy
MONTHLY
$69 /mo
billed monthly
7 day free trial. Cancel anytime
×
Take Your Forum Experience
to the Next Level
Create a free account and join over 3 million investors sharing
their journeys and helping each other succeed.
Use your real name
By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.
Already a member?  Login here
Tax, SDIRAs & Cost Segregation
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated almost 5 years ago on . Most recent reply presented by

User Stats

5
Posts
0
Votes
Aiyman Khan
0
Votes |
5
Posts

How to practically make a distribution in an S corp

Aiyman Khan
Posted

I am trying to figure out that how will the actual draw for a distribution be made? Would it be mage through a W-2 paycheck as bonuses, or a separate check/bank withdrawal, or paid at the end of year etc... Also I want to know is the distribution subject to income tax and that to the to the business or personal level. Please can someone give me an answer relevant to an example of a profit made through a flipped property, that has a short term capital gain tax event and the s Corp owner wants to draw from that profit, and also would the profit be double taxed as capital gains and income tax? 

Most Popular Reply

User Stats

5,409
Posts
2,575
Votes
David M.
  • Morris County, NJ
2,575
Votes |
5,409
Posts
David M.
  • Morris County, NJ
Replied

@Aiyman Khan

First, technically a dipped property transaction makes your a dealer, not an investor, so in the eyes of the irs and the profit from that the flip is active income, like a wage.

To your question, I believe the ways to withdraw money from a S Corp is by salary or dividend. The former is W-2 income subject to all applicable payroll taxes. The latter is subject to income like any other dividend. This is the main advantage of the S Corp is after you pay yourself a reasonable salary, the rest of the distributions should be taken as a dividend this not subjecting the income to payroll taxes.

The form of payment any legal tender available to the S Corp and the recipient... right? Its a matter of handling/categorizing the transaction properly...

Does this help clear things up?

Loading replies...