S Corp Basis Explanation | Distributions in EXCESS of Basis

In this video I discuss S Corporation Basis and how distributions in excess of basis cause you to pay capital gains taxes. I also discuss how to avoid taking distributions in excess of basis.

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#basis #capitalgains #taxes #scorp

[Caramel]

Finally, someone does explain the distribution in a very concise manner. Thank you for that

[lauraq]

Your videos are perfect for new-to-the-game small business owners. Understandable, step-by-step, practical. Thank you.

[johnfrank]

I enjoyed this video. One thing I would love to see that would help long time business owners is how to re-create basis from their history of K-1s. Especially for things like box 16 code C non-deductible items and such. Maybe a tutorial showing exactly which boxes on K-1 are additions to that original capital contribution and which boxes are subtractions so that one could re-create an correct history of basis given that the IRS is now asking that it be tracked correctly.

[iklaseksambi]

Hi Navi, I'm a Tax Preparer and this video is truly helpful. Thanks for sharing.

[andreahilliard]

A million thank yous. You were able to make this capital gains make sense in 15 minutes that multiple conversations with my accountant could not achieve. I changed my business structure from sole proprietor to S Corp January 2020 and just as you said took an EIDL loan without the understanding of the impact it would have on my taxes. Now, three years later I am understanding how to get out of the capital gains hole. Again, thank you so much.

[sewingseeds.]

Finally, I get it. 😊 You explained this so well!!! 🎉Thank you and I’ll check out your courses you have. 👍🏼

[gbrcllc]

Thank you for this video! I'm learning S Corps for a few clients. Your excel format streamlined and easily understood.

[spyder]

Thank you. This was a good way to simply explain how an owner takes out more than their basis. The only thing missing would be an explanation of how to change the excess distributions to be a loan to shareholder to avoid paying cap gains on it.

[qdwvqlq]

Very helpful. Thank you! How do you add a new shareholder to your existing S-Corp?

[ShibaSoftware]

Thanks for making this video. Can you make a follow up video on how to track basis in Quickbooks and how to file form 7203? Also, any strategies to optimize for taking maximum amount of distributions while maintaining positive basis? :)

[jiwonstr]

Hi Navi. Great content and simple math for explanation and walk-through. Is 'Distribution' the same as the Owner's Draw (the money you take out of the business account to your personal account)? And is 'Basis' the same terminology for the Accumulated Adjusted Account (AAA)? My CPA tells me to watch out for how much I take out (Owner's Draw) or I will have to pay the Capital Gain taxes on my AAA. Your video seems to nail my question and how to calculate the AAA. Thank you!!

[wskzgpu]

Very helpful. Thank you for making this video.

[lunamorris]

This is a fantastic video. It's clear and easy to understand your explanations. Thank you for providing this information.

[MarPF]

Thanks for the video. I don't see how a loan would help resolve the issue as it will be recorded as a liability and not increase basis.

[Kimmcmahon]

This was great. If a shareholder who took out a distribution that was more than their basis, can they book that draw as a 'loan' to the company and pay it back the next year or later?

[st-tube]

Great way to lay things out bare in Excel and explain it. Fantastic

[zewtgzt]

Thank you for your video. It was exceptionally helpful in explaining some things I had been wondering for a while.

[theblackharted]

Navi, could you explain the steps of going from 2MLLC (Form 1065) to an S Corp the next year? How is basis transferred to the 1120S?

[JayNGO]

Isn’t it a great idea to invest more capital from the beginning and not use credit cards? Liabilities are the main issue I assume? And over/under payments.

[gimmekimmy]

how does the irs know what your distributions are? if you're only taxed on net profits and distributions dont get taxed, how do they track this? (i'm thinking of distributions as any zelle payment or check that is over and above the payroll wages you process for yourself as a s corp owner on w2. is that what you're referring to or is distributions referring to something more detailed? thanks