An S corporation with earnings and profits can make a taxable dividend distribution by making a AAA bypass election.

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An S corporation with earnings and profits can make a taxable dividend distribution by making a AAA bypass election. This allows the corporation to distribute accumulated earnings and profits as a dividend without first having to distribute the accumulated adjustments account (AAA), which is typically tax-free. However, this election may have negative tax consequences for the shareholders, so it should be made carefully and with the guidance of a tax professional.

An S Corporation with Earnings and Profits Can Make a Taxable