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how to treat distributions from C Corp

Level 1

Client has overdraft protection on her personal checking account from her C Corp cash account.  Treatment there is debit to Shareholder Distributions.  Any reason to treat this as anything other than dividends on her personal return?  Her salary from the C Corp is appropriate.

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1 Comment 1
Level 15

You seem to using the words Distribution and Dividend as if they are synonyms. They are Completely different in their tax treatment, and C Corp has different provisions than S Corp. You seem to have a person taking C Corp funds for Personal; think "Enron" in regards to this type of action.

I think you might want to treat this as Employee Loans to be repaid, or Owed From Shareholder, for example. And who signed off on that overdraft link? Again, it seems shady.

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