Discussion:Employer Credit for FICA paid on tips / Shareholder has zero basis in S Corporation
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Discussion Forum Index --> Tax Questions --> Employer Credit for FICA paid on tips / Shareholder has zero basis in S Corporation
| 11 September 2009 | |
| I’m looking at the shareholder’s K1 right now. There were no basis adjustments during the year. His basis at the start of the year is zero.
Here is the K1 information: Line 1: Ordinary Business Income (Loss) ($5,000) Line 13N: Credit for Employer FICA taxes paid on tips ($1,200) Line 16C: Items Affecting Shareholder Basis/Nondeductible Expenses ($1,300) I know that I will not be able to deduct the ordinary business loss on the shareholder’s individual return. How will I account for the credit for FICA paid on tips? Will I be able to take this deduction on Form 8846 on the individual return? (Note: Before entering K1, shareholder’s total tax is more than the credit for FICA paid on tips.) If yes, how will this affect the basis for the current and future years? | |
Seaside CPA (talk|edits) said: | 11 September 2009 |
| The General Business Credit (which the employer credit for FICA paid on tips is a part of) may be limited. The credit is limited to taxpayer's "net regular tax." See IRC Sec. 38(c). The credit should not affect stock basis. (Section 620) | |
