Reversing [S-Corp] distribution?

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theplayer11
Posts: 487
Joined: Tue Jul 22, 2014 8:55 pm

Reversing [S-Corp] distribution?

Post by theplayer11 » Fri Sep 22, 2017 7:47 am

What if I recently made a distribution(simple transfer between business and personal accounts at same bank), but then decided to take the distribution as payroll instead or just leave in the business? Can I simply transfer the money back?
Any ramifications?

theplayer11
Posts: 487
Joined: Tue Jul 22, 2014 8:55 pm

Re: Reversing scorp distribution?

Post by theplayer11 » Fri Sep 22, 2017 6:43 pm

bump....any opinions?

kewper
Posts: 13
Joined: Fri Apr 10, 2015 9:51 am

Re: Reversing scorp distribution?

Post by kewper » Fri Sep 22, 2017 6:45 pm

If the transfer back is in the same year, it should be fine. You basically had a distribution, lowering your basis, but then re-contributed it back to capital, increasing your basis. Should be a nothing and I wouldn't report in on 1120S, only NET distributions.

randomguy
Posts: 6299
Joined: Wed Sep 17, 2014 9:00 am

Re: Reversing scorp distribution?

Post by randomguy » Fri Sep 22, 2017 8:19 pm

kewper wrote:
Fri Sep 22, 2017 6:45 pm
If the transfer back is in the same year, it should be fine. You basically had a distribution, lowering your basis, but then re-contributed it back to capital, increasing your basis. Should be a nothing and I wouldn't report in on 1120S, only NET distributions.
I am not sure about not reporting it versus reporting both the distribution and contribution.It should net out to 0. If anyone every tries to pierce your corporate viel you want it to look like they are as separate as possible and not that you are treating the corporation money as an extension of your bank account.

theplayer11
Posts: 487
Joined: Tue Jul 22, 2014 8:55 pm

Re: Reversing scorp distribution?

Post by theplayer11 » Fri Sep 22, 2017 8:39 pm

randomguy wrote:
Fri Sep 22, 2017 8:19 pm
kewper wrote:
Fri Sep 22, 2017 6:45 pm
If the transfer back is in the same year, it should be fine. You basically had a distribution, lowering your basis, but then re-contributed it back to capital, increasing your basis. Should be a nothing and I wouldn't report in on 1120S, only NET distributions.
I am not sure about not reporting it versus reporting both the distribution and contribution.It should net out to 0. If anyone every tries to pierce your corporate viel you want it to look like they are as separate as possible and not that you are treating the corporation money as an extension of your bank account.
true...but I have never had a questionable transaction before in regards to a possible co-mingling between personal and business funds. I was hoping it could just be shown as a mistake, with the distribution meant to be a payroll. I'm sure the IRS wouldn't have a problem as it nets them the FICA taxes. This wouldn't even come into question without an audit for something else..correct?

kewper
Posts: 13
Joined: Fri Apr 10, 2015 9:51 am

Re: Reversing [S-Corp] distribution?

Post by kewper » Sat Sep 23, 2017 7:29 pm

I might keep a note in your records "reversed distribution made by mistake"

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