C corporation dividend or non dividend?

Forum|Forum|4 years ago
January 22, 2022
1 reply
22 views

I have a new client that is closing out her C corp in 2021. The problem is she transferred over 100k to her personal account in 2021 to pay the C corp's 2020 tax liability. I would hate to see her pay taxes on that mistake. Any thoughts?

Thanks

Lee

ProSeries Professional

This topic has been closed for replies.

Best answer by IRonMaN

It was a corporate tax and now it's paid so I think even the IRS agent with the poorest eyesight would see that --------- at least after a little explaining.

sjrcpa

Level 15

I'd treat the tax amount as tax expense. Any excess is dividend.

But why'd she do that? Should have made corporate estimated tax payments.

The more I know the more I don’t know.

A

Avs19Author

Level 6

The C-corp sold a building in 2020 which generated a large capital gain. She said that she didn't like the previous accountant so I'm assuming that she took it upon herself to make her own decisions.

My thought was to take it as an expense as well. Just not sure if the IRS would see it as a dividend being that it went directly to her first.

Thanks for the quick response sjrcpa!

IRonMaNAnswer

Level 15

It was a corporate tax and now it's paid so I think even the IRS agent with the poorest eyesight would see that --------- at least after a little explaining.

Slava Ukraini!

Sign up

Login with SSO

Let's get you signed in

Login with SSO