Can You Have Retained Earnings Without Paying Taxes?

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ABOUT JASMINE DILUCCI, JD, CPA, EA

Jasmine DiLucci has specialized in tax since high school when she first became licensed to represent taxpayers before the IRS.

Now as a tax attorney and CPA, she works with individuals and business owners across the nation to on Tax Planning, CFO Advisory, and IRS Tax Resolution

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Disclaimer: This information on this channel is for educational purposes only and does not constitute professional legal or tax advice.

# # #jasminedilucci

[headlibrarian]

The problem is that the retained earnings threshold for C corporations hasn't been changed in 40+ years. The lack of inflation indexing kills small businesses..

[clarkvaughan]

She makes tax law come alive. Getting a tax law PhD too? I see a future tenured professor, if that's what the goal is. Getting this knowledge while it's still available...😊

[ElmerOmero]

The more she informs me the more I think of the Boston tea party.

[caramelcatfish]

Taxing excess retained earnings is such a foreign concept coming from Australia. Thank you for the videos.

[Tekevin]

Just incase anyone is wondering the penalty is subject to 20% and is called the accumulated earning tax. The reason why it’s 20% is because 20% is the highest tax for capital gain.

[darkaquatus]

There's not a lot of lobbyists in Washington for small businesses, after all. And politicians can't earn great amounts of power and wealth by making deals with them behind closed doors. So yeah, that's why things will eventually always end up like this.

[ChadEverett-rtcd]

As a small business owner in Texas, I would love to know what I owe (percentage wise). Every year we sit down with our tax attorney and CPA to find out what this year looks like and prepare for what next year we can do to try to help. I would love to just know … No loop holes, no deductions, nothing special - just what is my cost of doing business and don’t punish me if and when I succeed. Just imagine what our economy could be like!

[BFF-Bootcamp-Belleville-NJ]

If Mr. Basil, my accounting teacher in high school, were this engaging, I would've become an accountant.

[pasav]

C Corps are a double taxation entity. Excess retained earnings are a work around for not paying taxes on dividends earned. S corps and partnerships pay taxes only once at the partner/member level.

[demorippa]

If I ever get married, it would have to be to someone with her brain and warm personality. Her counters are so informative. I don't even live in America.

[danguee]

Yes - something similar here in the UK. I've built up capital in my small business (£250k) - accumulated profit after 19/20% corporation tax. But to extract that as dividends, I'd have to pay another marginal 32.5% (soon to be 40%).

[ZiaGameDev]

How are people supposed to possibly get into businesses when this crap is so complicated. Its like a wall of regulation that blocks people out who cant afford attornies and tax consultants to help them. This is ridiculous.

[michaelnieter]

I just learned about this in studying for REG for the CPA exam. I had never heard of the penalty before

[cvokoye]

I love that thanks to my CFP studies I understood everything she said 😊

[rescuedcastaway]

As a small business owner, I can confirm that the IRS hates small businesses. You HAVE to cheat or make enough to take advantage of those crooked funneling loopholes. To hell with the IRS.

[luckyjinxer]

Well - I'd still pay the passthrough taxes (w/ QBI - even though that calculation is hell to reconcile) then deal with a C-Corp. Not only double taxed - bad enough - but cross accrual sucks, well, a lot of little things, make it a waste of professional fees. There's a reason everyone is switching to S-corps. I'd only want to be a C-corp if I was statutorily required to for my entity type or trying to do something crazy like rasing a bunch of capital quickly or have some weird tax situation that would disallow sub-chapter S status. Even a C-corp is required to issue dividends something or it would be penalized.

[thebclpoonilli]

the government has destroyed small business. the only thing keeping it going is that there are so many people willing to try. the government makes it so difficult to process all the paperwork and comply with all the unknowns.

[dillonbooker]

Our government needs to be reigned in. It's like a irresponsible couple who overspend and don't manages their finances properly but has the power to just make up new tax rules to fund their poor decisions. I see so many people in the world who make terrible financial decisions all the time and the people in our government are no different, they're just people and shouldn't force us to pay for their bad habits.

[thatchallengechannel]

You have to reinvest into the company or put it into a new business, real estate, or other business investments before end of your tax year. This is why S Corp vs LLC conversations have to be had before starting a new business. You need to know what your actual tax liabilities will become.

[kaydim]

I'm confused, you pay taxes on Net Income, RE is a balance sheet account. Is Dave saying that you need to pay taxes on RE or is he saying if you have too much, then you have to pay a tax?