S-Corp distribution

[Intellecom1]

This has been our best year for our s-corp and we need to pay estimated taxes but if I take out what I need to pay that will be more than the basis in the company until after the first of the year. Can I take the money out as a loan to the shareholders or would I be better off waiting until the first of the year

[Freelancier]

Pretty sure your basis has nothing to do with whether you can pay a dividend to yourself. If the cash and cash flow is there to support paying yourself a dividend, then do that (and make sure you document the decision).

If I remember right, my corporation's stock basis is all of $500. My dividends are a LOT more than that every year. Only thing you can't do is have it be your primary place of employment and pay yourself entirely through dividends to avoid paying social security and medicare taxes (unless it's a corporation with lots of shareholders who are also getting those dividends).

[Intellecom1]

We pay the shareholders more than reasonable salary but if they take a distribution more than the current basis, I think that will present a problem. That's why I was wondering about doing it as loan to shareholders then repay after the first of the year

[Freelancier]

if they take a distribution more than the current basis, I think that will present a problem.

Why do you think this?

[Intellecom1]

The company will show negative capital since R/E won't be distributed until after the first of the year

[Freelancier]

Are you saying you have no net earnings and you're taking dividends? If you have net earnings, the dividends would come out of that. On the other hand, if you were to take a loan and have no net earnings and pay dividends from the loans (which happens in the real world all the time), you're still ending up with a negative to your equity portion of the balance sheet, so I don't see why you're worrying.