S Corp Distributions Three made up shapes.

These three shapes are made up.

The three shapes below are invented. They are not clients. They have no dollars, no towns, and no timelines borrowed from a file. They exist so the three names can be seen without a costume of realism. If a detail is missing, that is deliberate. A shape with a dollar on it would be a sample, and samples are how people talk themselves into a ratio.

Shape one, the owner who works the counter.

This owner opens a shop, sells, reorders, and stays until close. Payroll has been running, but the owner also moves cash to a personal account on busy weeks. The wage question is the counter work. The transfer is a separate pile. Basis decides how much of that second pile can leave as cash that is not pay. Nothing in the shape tells you the amounts, because the amounts would be fiction presented as guidance.

What we would do is ordinary. Read the duties. Compare them with the wage that payroll already paid. Put the transfers in their own account. Measure the ceiling. Refuse to blend the piles because they happened in the same week.

Shape two, the owner who stopped working.

This owner used to do the work and now does not. Cash still moves. The old wage is still on the books out of habit, or the wage stopped and the transfers did not. Either way the name has to change. Pay for work that is no longer being done is not pay. Cash that continues to leave needs basis, or paper if someone insists it is a loan, or it needs to stop.

We would not invent a wage to make the transfers look safer. We would not invent a note after the fact to rename them. We would say which name the facts still support.

Shape three, profit on paper and a quiet bank.

This company shows profit and the owner took no cash. The owner feels the profit on the personal return and feels nothing in the personal bank account. The shape is common and it is not a mistake by itself. Estimates and basis are the conversation. A distribution that never happened should not be written in to make the feelings match.

We would show the K-1 and the bank on one screen and leave them in two columns. The owner can decide later, inside an engagement, whether cash should move. The shape itself does not decide.

If one of these is close to your year, say which shape on the form, and then use your own facts when we talk. The questions page collects the same ideas as questions. The wage page is where shape one usually starts.