I run an s-corp. If he’s taking distributions, that would signal to me that he thinks that’s profit, or going to be profit, and would expect to pay income tax on those distributions. Those est taxes should be paid quarterly.

Anonymous wrote:

Anonymous wrote:Purely from a business perspective I don't understand why he is distributing income from his business and then, as he claims, making additional capital contributions to fund the business. It seems like it would make more sense to just keep the income with the business as retained earnings but maybe there is some tax angle here.

It is probably a pass through entity so the non-salary profit amounts pass through as distributions regardless of whether they are actually distributed out of the business and into the individual's bank account.

In short, yes, those monies may have been reflected as distributions on his individual tax return but in fact retained by the business.

Yes and the couple is paying taxes on those distributions he is not taking home — yet.

Anonymous wrote:

Anonymous wrote:He is trying to make it look like he has outside capital coming in. Scamming someone.

Why (NP) other than to get someone to invest in his company?

OP, could it be that he is subcontracting with people and/or has otherwise large expenses?

Well yeah doing that to get investors is fraud.

Distributions from a Partnership or LLC are indeed flow throughs of gross income. So, yes, it it income. He will be taxed on it- just like W-2 income

Anonymous wrote:He is trying to make it look like he has outside capital coming in. Scamming someone.

Why (NP) other than to get someone to invest in his company?

OP, could it be that he is subcontracting with people and/or has otherwise large expenses?

Anonymous wrote:He is trying to make it look like he has outside capital coming in. Scamming someone.

I had this thought as well.

Anonymous wrote:Why is she using you as a sounding board? She has an attorney.

- signed, an attorney

+1

Another attorney.

(And she'll end up even worse for the wear, because she won't be getting OP's opinion, she'll be getting DCUM's ... lol)

Is he the sole owner of the company?

Anonymous wrote:

Anonymous wrote:Why is she using you as a sounding board? She has an attorney.

- signed, an attorney

She's just overwhelmed and wanted to share, I suppose?

Sharing = fine

Sounding board = fine

You soliciting advice from here to better your/her understanding makes no sense. She either trusts her attorney or should get a second opinion (from an attorney).

Anonymous wrote:Purely from a business perspective I don't understand why he is distributing income from his business and then, as he claims, making additional capital contributions to fund the business. It seems like it would make more sense to just keep the income with the business as retained earnings but maybe there is some tax angle here.

It is probably a pass through entity so the non-salary profit amounts pass through as distributions regardless of whether they are actually distributed out of the business and into the individual's bank account.

In short, yes, those monies may have been reflected as distributions on his individual tax return but in fact retained by the business.

He is trying to make it look like he has outside capital coming in. Scamming someone.

Purely from a business perspective I don't understand why he is distributing income from his business and then, as he claims, making additional capital contributions to fund the business. It seems like it would make more sense to just keep the income with the business as retained earnings but maybe there is some tax angle here.

Anonymous wrote:Why is she using you as a sounding board? She has an attorney.

- signed, an attorney

She's just overwhelmed and wanted to share, I suppose?

Why is she using you as a sounding board? She has an attorney.

- signed, an attorney

My sister and her spouse are divorcing.
She just sent me over some paperwork, a potential "temporary" support order her lawyer is trying to file. My sister makes considerably less than her husband, who owns a consultancy.
She claims in the paperwork that his income is 180k but that his distributions on their last tax return were 450k.
He is saying that his distributions from the company are not his earned income, but money to keep the business afloat.
Can someone explain this to me like I'm 7?
I'm not a lawyer but she just wants me as a sounding board. I don't even know what this means. They seem to have lived well but I sincerely doubt her husband makes over a half-mil per year -- his claim that the distributions (don't clearly get this term) dont' go into his pocket make some sense to me, but she is insisting that he should pay alimony based on it.
Anyone BTDT?