S Corporation Tax Implications During the Operation Phase
An S corporation can provide business owners with valuable tax and operational flexibility, but S corporation taxation is often misunderstood. The most common misconception is that owners are taxed only on the cash they withdraw. Generally, that is not how S corporations work. An S corporation typically passes taxable income, deductions, gains, losses, credits, and […]
S Corporation Contribution Tax Implications
Shareholders frequently transfer money or property to an S corporation to start a company, fund expansion, purchase equipment, cover operating expenses, or strengthen working capital. Although these transactions may appear simple from a bookkeeping perspective, their federal tax treatment can have long-term consequences. The transfer may affect shareholder stock basis, debt basis, deductible S corporation […]
Partnership Tax Implications During the Operation Phase
Operating a partnership creates tax issues that are different from simply calculating how much cash the business earned. Partners must understand how taxable income is allocated, how Schedule K-1 works, how distributions affect basis, how guaranteed payments are treated, how partnership debt affects each partner, and whether business losses can actually be deducted. A partnership […]
Partnership Tax Implications During the Contribution Phase
When business owners form or fund a partnership, they may contribute cash, real estate, equipment, inventory, intellectual property, or other assets. While partnership contributions are often structured so that no immediate federal income tax is recognized, the transaction can create important tax consequences that continue throughout the life of the partnership. Understanding the tax implications […]