Problems Ahead for Your S Corporation | USTaxAid Problems Ahead for Your S Corporation | USTaxAid

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Problems Ahead for Your S Corporation

Written by Diane Kennedy, CPA on April 20, 2010

4-20-1Do you have an S Corporation? The IRS might have a couple of things they’re going to talk to you about. Here’s a few questions to get ahead of the IRS audit that might be coming your way (if you have an S Corporation):

Question #1: Do you take a salary? And if you do, do you report it as an Officer Salary on your Form 1120S?

If you say ‘no’ to either question, the chances are really good that you’re going to get an audit notice.

4-20-2Question #2: Have you correctly reported your medical insurance?

Make a note, if you own part of the company, you need to report the premiums on your Form W-2.

Question #3: Are you properly tracking your stock and debt basis?

You don’t need to report this to the IRS when you file (yet), but you have to be ready prove that you have a running total since day one that proves the amount of debt basis.

4-20-3The Sole Proprietorship is still the business structure (or rather un-structure) most likely to get audited. If you have an S Corporation, that doesn’t mean you’re out of the woods though.

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