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D
DWH2021
Level 1
November 30, 2022
Question

Dissolving an S-Corp, if all that is left on S-Corp B/S is cash in bank, common stock and retained earnings, can we distribute the retained earning to the 2 shareholders tax free?

  • November 30, 2022
  • 1 reply
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    1 reply

    sjrcpa
    sjrcpa
    Level 15
    November 30, 2022

    You don't distribute retained earnings. You distribute the cash. It is tax free to the shareholders up to the amount of their basis in the S Corp stock.

    The more I know the more I don’t know.
      IRonMaN
      IRonMaN
      Level 15
      November 30, 2022

      Plus, I think the shareholders would prefer getting the cash instead of a piece of paper saying "here is your distribution of retained earnings" 😉

      Slava Ukraini!
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