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S-corp Loss Deduction Against Personal Income

Workers Compensation Law Discussion

S-corp Loss Deduction Against Personal Income

Postby Waldhramm » Wed Nov 30, 2016 4:54 pm

s About Taxes)/S-Corp loss deduction against personal income Advertisement Expert: John Stancil, CPA - 12/2/2007 I have formed an S-Corp for my restaurant business and I am the 100% owner.   My wife is an employee, basically do all the work, and gets paid a salary.   I have another job and only spend about 10-20hrs/month doing some bookkeeping work for the restaurant business, thus paying myself about $3000/year .  The business is still not making money.  Would I be able to deduct losses in this s-corp against my personal income eventhough I don’t materially participate?  

Given that the business is still not making money, do I still have to put myself on the payroll and pay myself the $3000/year and pay worker compensation/employment/medicare taxes?  Currently, the payroll processor says the state of California has a minimum salary for officer of $32k, so if I put myself on the payroll and only pay myself $3k/year, I am still subject to paying the worker compensation on the full $32k  (~5%).
Waldhramm
 
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S-corp Loss Deduction Against Personal Income

Postby Madoc » Sat Dec 03, 2016 4:15 am

Jitta,

Thanks for your question.

That is one of the features of an S-corp. Losses(and gains) are passed on to the owner regardless of withdrawals.

Since the business is not earning a profit, you do not have to pay yourself a salary, at least for federal tax purposes.  I am not familiar with the CA laws, so I cannot address that issue.

Hope this helps.

John Stancil, CPA
Madoc
 
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Joined: Sat Feb 08, 2014 9:44 pm

S-corp Loss Deduction Against Personal Income

Postby Randall » Sun Dec 04, 2016 9:47 am

s About Taxes)/S-Corp loss deduction against personal income Advertisement Expert: John Stancil, CPA - 12/2/2007 I have formed an S-Corp for my restaurant business and I am the 100% owner.   My wife is an employee, basically do all the work, and gets paid a salary.   I have another job and only spend about 10-20hrs/month doing some bookkeeping work for the restaurant business, thus paying myself about $3000/year .  The business is still not making money.  Would I be able to deduct losses in this s-corp against my personal income eventhough I don’t materially participate?  

Given that the business is still not making money, do I still have to put myself on the payroll and pay myself the $3000/year and pay worker compensation/employment/medicare taxes?  Currently, the payroll processor says the state of California has a minimum salary for officer of $32k, so if I put myself on the payroll and only pay myself $3k/year, I am still subject to paying the worker compensation on the full $32k  (~5%).
Randall
 
Posts: 34
Joined: Wed Feb 26, 2014 6:30 am


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