Discussion:Constructive Dividend of C Corp
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| Revision as of 00:49, 1 September 2009 Riley2 (Talk | contribs) (The dividends sh) ← Previous diff |
Revision as of 22:23, 1 September 2009 TTMM (Talk | contribs) (What about this) Next diff → |
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| There is no basis for assigning $150,000 to each shareholder.}} | There is no basis for assigning $150,000 to each shareholder.}} | ||
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| + | {{ForumReplyPost|UserID=TTMM|Date=1 September 2009|Text=What about this individually and severally liable nonsense? Is the RA saying they are individually responsible for the $150K? But if one shareholder pays the tax aren't the other off the hook? | ||
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| + | None of the shareholders benefited from the disallowed expenses. }} | ||
Revision as of 22:23, 1 September 2009
Discussion Forum Index --> Advanced Tax Questions --> Constructive Dividend of C Corp
Discussion Forum Index --> Tax Questions --> Constructive Dividend of C Corp
| 1 September 2009 | |
| My client, a C Corp, was audited by the IRS and the RA disallowed some items totaling around $150K and made them constructive dividends to the three shareholders. On the individual returns he assessed tax on the $150K on each return instead of assessing tax on $50K on each return. Am I missing something? Shouldn't each shareholder pay tax on $50K? The audit report says that the $150K constructive dividend is being assigned individually and severally to each shareholder. I really appreciate everyones help and advice. Thanks | |
| 1 September 2009 | |
| The dividends should be assigned to the receiving shareholder. Constructive dividends need not be proporional to stock holdings. See Seminole Thriftway Inc v. U.S.
There is no basis for assigning $150,000 to each shareholder. | |
| 1 September 2009 | |
| What about this individually and severally liable nonsense? Is the RA saying they are individually responsible for the $150K? But if one shareholder pays the tax aren't the other off the hook?
None of the shareholders benefited from the disallowed expenses. | |
