Extra Taxes on S Corporation Distribution? - Think Outside the Tax Box

Extra Taxes on S Corporation Distribution?

Question: My client plans to take about $15,000 in distributions in excess of his basis from his S corporation construction business. I know this generates tax for him. He’s in the 32 percent tax bracket and single. Does he also have to pay the 3.8 percent net investment income tax and the 0.9 percent additional Medicare tax on this amount? Is there a way for him to avoid taxes on this amount?

Answer: Without planning, yes, the taxpayer has to pay tax on this excess distribution amount. There is a completely legal way to either avoid or substantially reduce this tax, though. Read on to learn how.

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Think Outside the Tax Box provides tax reduction strategies along with practical implementation advice in order to reduce your clients’ federal tax bill with ease.

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