What Is the Basis for My S-Corporation?

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Do you remember that 1998 New Radicals pop song called “You Only Get What You Give?” We’re as surprised as you are that the song isn’t about S-Corporation basis. Regardless, it’s “basically” how basis works.
Your S-Corporation basis is your individual equity in the S-Corporation. When you contribute funds or other property into an S-Corporation, your basis increases. When you pull income out of your S-Corporation, your basis in the S-Corporation decreases. Often different shareholders in an S-Corporation start with equal basis amounts, but each shareholder’s basis can diverge through the life of the business.
In this video we’ll cover why basis matters, why it matters whether a distribution is a dividend, and the importance of calculating your basis annually.
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#scorporation #basis #scorp

[@tldraccounting3134]

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[@MexicoTijuana741]

Is stock basis the same as inside basis?

[@mehdirizvi4750]

Thank you. It is very helpful. Please keep posting more contents.

[@TheDaisyChronociles]

Thank you for this clear explanation

[@sewingseeds.]

great presentation! thank you.

[@rstrunks]

Good work explaining a very complicated issue

[@mike2959]

Most small businesses start off with owner contribution. Like you said maybe 1000.00. But as in my case, a restaurant…took 6 months to even get the doors open for business. And for 6 months used a personal credit card to fund the entire thing. This is not uncommon. And yes this card is a personal card. Nobody has business credit when they open the doors. Obviously keep good books and separate the transactions out personal vs business. So your basis is really a moving number for sometime is my point.

[@sbdreamin]

any advice on determining basis for a well-established sole proprietorship converting to an S corp? There is her inventory, vehicles, money in banks, etc. Does all of that get added up to determine basis? There will be just the one shareholder; the current owner of the business. Are there tax implications of basis? Is a high basis a bad thing or a neutral thing or a good thing?

[@thomashesse4446]

Thank you!!!

[@marykcoughlin3627]

Well explained Tammy - I'll need to review again. Would love to see more videos.

[@nadname5291]

Thank you for explaining. Does LLC treated as Scorp need to calculate stock basis?

[@susanfuentes5825]

Excellent explanation... Thanks

[@mrjoneswtf]

So helpful. Thank you!!

[@miksem]

Do you mind explaining on how to extrapolate this information from QB reports ( May be which report most appropriate) for a new requirement on personal taxes form 7203 for most people with S corp K-1 income. Thanks!

[@morecowbell235]

If you are using your business income to operate the business, is that still considered a distribution?
I ask because I take money out of the account to run the business. I do not take it for personal gain or use.

[@victorpoliashov2467]

Is the basis based on that year that distribution is taken out of? For example if basis for 1st year was 10k, then 5k taken as distribution. Then for year two had 20k basis and distribution of 20k, would the 5k add from the previous year and keep you positive?

[@headlibrarian1996]

Basis carries over from year to year. You ended year one with $5k in basis, earned $20k giving you $25k in basis at the end of year two before expenses and withdrawals, and then spent/withdrew $20k, leaving you with $5k basis going into year 3.

[@AhmedMohamed-gy2ri]

I have started the company many years (15). I started with 16k. 15 years later I never took any distribution, but now I want to do that because I have enough cash to do so. Do I go by what my in my retained earnings are in my balance sheet of quickbooks?

[@averybeasley7347]

Yes, retained earnings or your capital account. Are you an s corporation?

[@cameron9643]

How would you get more money in your account that didn’t have basis?

[@headlibrarian1996]

Debt. Corporate-level debt doesn’t create basis.

[@CryptoQueen8888]

I might have excess distribution due to the s corp having many many corporate loans. How much is capital gains for a 100% shareholder

[@dowhatevertfyouwannado1387]

♥️

[@DT_123]

Basis can’t go negative

[@nextari]

did you get a $20 mic yet?

[@dkdk9138]

Thank you. Very clear and very explained.