When considering complaint information, please take into account the company's size and volume of transactions, and understand that the nature of complaints and a firm's responses to them are often more important than the number of complaints.īBB Business Profiles generally cover a three-year reporting period. However, BBB does not verify the accuracy of information provided by third parties, and does not guarantee the accuracy of any information in Business Profiles. BBB asks third parties who publish complaints, reviews and/or responses on this website to affirm that the information provided is accurate. Smarter Decisions.BBB Business Profiles may not be reproduced for sales or promotional purposes.īBB Business Profiles are provided solely to assist you in exercising your own best judgment. We are here and happy to help! Call us today at 41, find us on Facebook, LinkedIn, and Twitter, or visit our website to learn more. You can learn more about the topic in this blog by contacting us. Abacus professionals provide leadership by relentlessly pursuing the best guidance possible so those we serve can make smarter decisions. Our team focuses on tax, accounting, audit, and business consulting to partner with you and your business. We can help you get the maximum out of your corporation at the minimum tax cost.Īt Abacus CPAs, our focus is you! We believe that our employees and clients deserve to interact in an environment that fosters growth, trust, and confidence. If you’re interested in discussing any of these ideas, contact us. You may need to obtain an independent appraisal to establish the property’s value. A sale should be on terms that are comparable to those on which an unrelated third party would purchase the property. And you shouldn’t sell depreciable property to a more than 50% owned corporation at a gain, since the gain will be treated as ordinary income, rather than capital gain. ![]() For example, you shouldn’t sell property to a more than 50% owned corporation at a loss, since the loss will be disallowed. However, certain sales should be avoided. You can withdraw cash from the corporation by selling property to it. You can also establish a salary reduction plan that allows you (and other employees) to take a portion of your compensation as nontaxable benefits, rather than as taxable compensation.ĥ. Most of these benefits are tax-free only if provided on a nondiscriminatory basis to other employees of the corporation. Examples are life insurance, certain medical benefits, disability insurance and dependent care. Consider obtaining the equivalent of a cash withdrawal in fringe benefits that are deductible by the corporation and not taxable to you. Also, consider the effect of the corporation’s receipt of interest income.Ĥ. All interest and principal payments should be made when required under the loan terms. This should include a provision for interest and principal. However, to avoid having the loan characterized as a corporate distribution, it should be properly documented in a loan agreement or a note and be made on terms that are comparable to those on which an unrelated third party would lend money to you. You may withdraw cash from the corporation tax-free by borrowing money from it. If it’s excessive, the excess will be nondeductible and treated as a corporate distribution.ģ. In either case, the amount of compensation must be reasonable in relation to the services rendered or the value of the property provided. The same rule applies to any compensation (in the form of rent) that you receive from the corporation for the use of property. However, it’s also taxable to the recipient. Reasonable compensation that you, or family members, receive for services rendered to the corporation is deductible by the business. If you make cash contributions to the corporation in the future, consider structuring them as debt to facilitate later withdrawals on a tax-advantaged basis.Ģ. If not, the “debt” repayment may be taxed as a dividend. This assumes that the debt has been properly documented with terms that characterize debt and that the corporation doesn’t have an excessively high debt-to-equity ratio. Additionally, interest paid on the debt can be deducted by the corporation. To the extent that you’ve capitalized the corporation with debt, including amounts that you’ve advanced to the business, the corporation can repay the debt without the repayment being treated as a dividend. However, a dividend distribution isn’t tax-efficient, since it’s taxable to you to the extent of your corporation’s “earnings and profits.” But it’s not deductible by the corporation.įortunately, there are several alternative methods that may allow you to withdraw cash from a corporation while avoiding dividend treatment. Do you want to withdraw cash from your closely held corporation at a low tax cost? The easiest way is to distribute cash as a dividend.
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