Financial planning for a small business is inherently tied with the owner. When you plan for the future of the company, you are planning for the individual as well. Trying to get the owner additional cash from their company is a common issue faced by many advisors. However, it is important to realize that the form of that cash movement may result in very different tax implications. Using easy to understand examples and cases, this course will explore the common methods used to transfer cash from a small business to the owner. We will look at how the tax implications differ depending on entity type and the form of payment.
Learning Objectives
- Compare the basic tax implications of distributions from a C corporation, S corporation, and partnership
- Calculate the tax implications of cash distributions and property distributions from S corporations and partnerships
- Calculate tax basis for a partnership and an S corporation
- Identify the factors that establish reasonable compensation, reasonable rent, and reasonable loans between a closely held entity and its owner
Major Topics
- The small business owner’s problem
- Distributions from a C corporation
- Distributions from a partnership
- Distributions from an S corporation
- Reasonable compensation, rent, and loans
