| How are HSA contributions made to shareholders who are not employees treated?
If the shareholder's of a corporation who not employees of the corporation receive contributions to their HSA, then these HSA contributions are treated as a distribution from the corporation to the shareholder's.
These so called distributions would then be actually treated as a dividend distribution to the shareholders subject to the dividend distribution rules. These state that these distributions are treated as dividends to the extent the corporation has earnings and profits, and the part that is not a dividend, will be applied against and reduces the adjusted basis of the stock.
The part of the distribution that exceeds the adjusted basis of the stock is then treated as a gain from the sale of or exchange of property. | 
