How are shareholder distributions reported on Schedule K-1 when using the S-Corp Form 1120S for my income taxes?
S-Corporations are pass through entities from a taxation standpoint. If you own an S-Corp and you have an income taxable year, then the federal income tax is generally payable on your personal tax return, or Form 1040 at the federal level. The income or loss is passed through via Schedule K-1. You will only pay income tax once, rather than being subject to the double income taxation of a regular or C-Corporation. If there is a loss, then the loss could possibly be deducted on your personal income tax return if you have a basis for the deductibility of that loss. If your accountant has been unable to explain something as basic as this concept to you, then it’s probably time for you to call our offices.
