For S corporations without earnings and profits from prior C corporation years, the taxation of cash distributions to the shareholder isgoverned by rules very similar to the rules for partnerships.

Question

Quizplus · Accepted Answer

S corporations and partnerships are both pass-through entities and are taxed similarly on distributions to shareholders/partners. Therefore, the taxation of cash distributions to the shareholder in S corporations without prior C corporation earnings and profits is governed by rules very similar to the rules for partnerships.

For S Corporations Without Earnings and Profits from Prior C