How to Keep Your S Corp Distributions Non-taxable
One of the benefits of an S corporation is that shareholders can generally take distributions without paying additional tax.
But there is an important limitation:
S corporation distributions are tax-free only to the extent of the shareholder’s stock basis.
If distributions exceed stock basis, the excess is generally treated as capital gain under IRC §1368.
Your Tax Year Is Bigger Than Your Calendar Year
A common misconception I see — even among highly educated professionals — is the belief that everything on your tax return has to happen between January 1st and December 31st.
It doesn’t.
For physicians, business owners, and self-employed professionals, this timing flexibility is often the key to making aggressive tax planning actually work in real life.
Let’s walk through the major deadlines — and what actually needs to happen by each one.
