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Old 05-28-2008, 04:20 PM
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What is the tax treatment for distributions for prior retained earnings?

I have an S corporation, with a few shareholders, that was originally a C corporation, which incidentally had a bit of retained earnings that was left in the corporation. For your information, the shareholders have never taken out any dividends before the election to be treated as a S corporation.

What would be the tax treatment for the stockholders' distributions for these prior retained earnings?

Also, are we required to file a form 1099-DIV to each shareholder?

Thanks a lot..



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