I am assuming this is a 1 person s-corp? If you have no basis in the company, I believe this means you have zero equity. So any distribution you take is going to cause negative equity on the balance sheet which means that liabilities are going to be higher than assets. I would have questions about the ability of this business to make a profit at that point.
I agree with the prior posts that you would pay tax on any distributions once basis is zero. If you think about it, you take a $1k distribution, causing equity/basis to go to -$1k. Then corp files for bankruptcy, dissolves and never pays the $1k back to whoever it is owed to. Personally, you have $1k income that was never taxed.
I agree with the prior posts that you would pay tax on any distributions once basis is zero. If you think about it, you take a $1k distribution, causing equity/basis to go to -$1k. Then corp files for bankruptcy, dissolves and never pays the $1k back to whoever it is owed to. Personally, you have $1k income that was never taxed.
Statistics: Posted by fullham — Sun Mar 17, 2024 9:34 am — Replies 2 — Views 390
