Stock Market

[KennyTheKangaroo]

With that being the case, even if you are the owner you are getting a check from the company. So essentially you control what you make (and what you pay in taxes. The remainder of the profits can be held on companies balance sheet in retained earnings.

this statement really isn't accurate. regardless of whether those earnings stay in the business or not, they are getting taxed at either the corporate level or the personal level. small business owners dont really control what they pay in tax.

[pfim]

With that being the case, even if you are the owner you are getting a check from the company. So essentially you control what you make (and what you pay in taxes. The remainder of the profits can be held on companies balance sheet in retained earnings.

this statement really isn't accurate. regardless of whether those earnings stay in the business or not, they are getting taxed at either the corporate level or the personal level. small business owners dont really control what they pay in tax.

The only thing they can control is being taxed on the income twice. If the company makes a profit, the profit is being taxed whether it stays in the biz or not.

[thehockeyguru]

With that being the case, even if you are the owner you are getting a check from the company. So essentially you control what you make (and what you pay in taxes. The remainder of the profits can be held on companies balance sheet in retained earnings.

this statement really isn't accurate. regardless of whether those earnings stay in the business or not, they are getting taxed at either the corporate level or the personal level. small business owners dont really control what they pay in tax.

The only thing they can control is being taxed on the income twice. If the company makes a profit, the profit is being taxed whether it stays in the biz or not.

Agreed, thats where filing as an "S" corporation comes in. They can control what they pay in tax because they are only taxed at the personal level. They are paid as a shareholder, and as owner you can determine how much that is.

[KennyTheKangaroo]

S Corporation shareholders have no control on how much tax they pay.

[thehockeyguru]

S Corporation shareholders have no control on how much tax they pay.

They dont control how much tax they pay, but they control the amount that is directed to them. If you pay 18% personal income tax on up to 200k in earnings and 25% on anything more they can avoid paying more in tax by giving themselves a salary such that they avoid the 25% income bracket.

[KennyTheKangaroo]

if they give themselves salary, they are just reducing the net income they would receive on their K-1 and increase the amount they would receive on their W-2. or is kenny the kangaroo missing something here

[thehockeyguru]

if they give themselves salary, they are just reducing the net income they would receive on their K-1 and increase the amount they would receive on their W-2. or is kenny the kangaroo missing something here

That's where I was mixed up, I was under the impression that when you filed you K-1 that you would not be liable for taxes on what remained in the company as retained earnings. After doing some research I realized that you in fact are liable for the companies income whether it is distributed to you or not.

[KennyTheKangaroo]

right

an advantage of an S Corp is that you are allowed to take distributions that are not taxed (they also do not reduce income). the trade off of these distributions are that they reduce your basis in the s-corp. the distributions are kind of a sticky issue with the IRS and congress.

S corporation shareholders usually get cranky when they have to pay a lot of tax on income that they technically did not receive. it happens fairly often.

[thehockeyguru]

right

an advantage of an S Corp is that you are allowed to take distributions that are not taxed (they also do not reduce income). the trade off of these distributions are that they reduce your basis in the s-corp. the distributions are kind of a sticky issue with the IRS and congress.

S corporation shareholders usually get cranky when they have to pay a lot of tax on income that they technically did not receive. it happens fairly often.

How does it become beneficial to take a distribution that isn't taxed if it reduces your basis? Aren't any funds received over the basis taxed as capital gains?

[KennyTheKangaroo]

yeah if distributions exceed basis, they are taxed as capital gains. so you just cant take distributions that exceed the amount of income that you have, which isnt very hard because its generally diffacult to take more money out of a business than the business is bringing in.

its beneficial to take a distribution because its tax deferred. you dont pay tax on that money right now. who wouldn't want to take money out of a business and not pay tax? but having a low/no basis in the business can really put you over a barrell when you sell the business.

[thehockeyguru]

Now I assume things would get really hairy if you were to implement a tax system like Herman Cain is proposing where capitals gains isn't taxed.

[KennyTheKangaroo]

well, thats a good question and there are a lot of different issues w/ capital gains that would need to be adressed.

in other news, the market bounced back today and gold fell 5.47 percent

[mac5155]

When should we expect some relief at the pump with these numbers..?

[Firebird]

When should we expect some relief at the pump with these numbers..?

$2.90 here

[shafnutz05]

When I was over in Jersey it was $3.25.

[Sam's Drunk Dog]

Never! Ahahahahahahahahahahaha!!

[mac5155]

holy ****.. its $3.65 here.

[mac5155]

When should we expect some relief at the pump with these numbers..?

$2.90 here

in Columbus? man.. im gonna have to get a tanker and make a road trip

[Firebird]

When should we expect some relief at the pump with these numbers..?

$2.90 here

in Columbus? man.. im gonna have to get a tanker and make a road trip

nah, you have a good memory though!

I don't live there anymore.

[mac5155]

/stalker

(i rremember you being an OSU fan.)

[Firebird]

/stalker

(i rremember you being an OSU fan.)

Well at least someone recognizes me and my 600 posts/year average.

[Bowser]

Dump your stocks, get to a fixed rate or re-mortgage to a lower fixed rate for your mortgage & pay just the minimum, and pay down your credit cards because this is going to be ugly, real ugly, very soon. There is no way the government can make up $4 trillion without raising taxes and interest rates.

[KennyTheKangaroo]

S&P 500 up 2.3 % today, gold down another 1.12 %.

[newarenanow]

Dump your stocks, get to a fixed rate or re-mortgage to a lower fixed rate for your mortgage & pay just the minimum, and pay down your credit cards because this is going to be ugly, real ugly, very soon. There is no way the government can make up $4 trillion without raising taxes and interest rates.

Do you think they will jump up in the next 4 days? (Rates)

[KennyTheKangaroo]

kenny the kangaroo recalls bernake saying that rates will not rise until 2012 or 2013 or something.