377– Distributions – “S” Corporation

Net Worth

Synopsis

Account 377

Debits

Credits

  1. Cash withdrawn from the corporation by the Shareholders.

  2. Value of assets transferred to Shareholders for personal use.

  1. Balance in this account at year end is to be transferred to Account 376 – Previously Taxed Income – “S” Corporation.

 

 

Remarks:

Shareholders of “S” corporations pay their income taxes on corporate profits as individuals, not as corporations.  As a result of this tax treatment, some retailer owners find the tax situation more favorable.  Adequate legal and tax counsel should be sought before forming a corporation of any status.

 

The reinvestment of “S” corporation income will take the form of a loan to the corporation from the owner(s).  This amount will be reflected in Account 347 – Long Term Debt Owners/Other.

Note: