Confused about S Corps?
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S Corp taxation might not be the most exciting topic, but here you are, reading up on the excess net passive income (ENPI) tax . So, let's cover this issue quickly and as painless as possible. If an S Corp was converted from a C Corp (and thus it has an AE&P account), you may potentially get into an unpleasant situation - additional tax (which stings!) on passive income. This is something the IRS checks on, especially if amounts are material. How can the IRS say that the S C

If you own an S corporation and are actively involved in its operations, the IRS expects you to pay yourself a salary. Why? Because the IRS wants to collect your self employment taxes (FICA and Medicare) and the only way they could receive their share of your self employment taxes is if you issue yourself a big fat W-2. The IRS is aware of the game some of us play. Not paying yourself high enough wages means less self employment taxes go into the IRS pocket. And that's why

Shareholders must keep thorough and accurate records to support their stock basis. (See Treas. Reg. § 1.6001-1(a) and they are...