Any distribution made by an S corporation during a tax year is taken into account before accounting for the year's losses.

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Quizplus · Accepted Answer

This is true. S corporations are pass-through entities, which means that the profits and losses are passed through to the shareholders' tax returns. Any distributions made to shareholders are taken into account before accounting for the year's losses. This can potentially result in a shareholder paying taxes on a distribution even if the corporation had a net loss for the tax year.

Any Distribution Made by an S Corporation During a Tax