S corp taking major losses for first time Hello,
My father owns a S Corp. He has never kept track of his stock basis. He's somewhere in the positive (since he pays himself mostly in wages rather than distributions). Most years his distributions are only 1-5% of his wages.
He paid his employees at end of 2014 but didn't get reimbursed by his clients for those wages until 2015. His profit and loss will be showing as - $30,000 for 2014.
Is this a major problem? He's never been in the negative before. I read over some stuff on debt basis and it is confusing to me. My father doesn't take advantage of what the s-corp offers in way of generally better tax savings but I don't want him to be majorly penalized either.
Thanks for reading |