Five strategies to withdraw cash from your closely held corporation
-2020 Year-end Tax Planning for Business Owners-
Owners of closely held corporations are often interested in withdrawing money from their businesses at the best tax rate possible. The simplest way is to distribute cash as a dividend. However, a dividend distribution is taxable to you to the extent of your corporation’s “earnings and profits,” and dividends are not deductible by the corporation. There are several alternative methods that may allow you to withdraw cash from a corporation while avoiding dividend treatment. Here are five strategies to consider:
1. Capital Repayments
To the extent that you’ve capitalized the corporation with debt, including amounts that you’ve advanced to the business, the corporation can repay the debt without the repayment being treated as a dividend. Additionally, interest paid on the debt can be deducted by the corporation.
Make sure the debt has been properly documented with terms that characterize debt and that the corporation does not have a high debt-to-equity ratio or the repayments may be taxed as a dividend. If you make future cash contributions to the corporation, consider structuring them as debt to facilitate later withdrawals on a tax-advantaged basis.
2. Pay Compensation
Compensation to you or family members received for services rendered to the corporation is deductible by the business. However, this is taxable to the recipient(s). This also applies to any compensation that you receive from the corporation for the use of property, such as rent. In both cases, the compensation amount must be reasonable in terms of the services rendered or the value of the property provided. If it’s considered excessive, the excess will be a nondeductible corporate distribution.
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3. Borrow with Loans
You can withdraw cash at a tax advantageous situation from the corporation by borrowing money from it. However, it should be properly documented in a loan agreement or promissory note to prevent it characterized as a corporate distribution. The loan process should follow any normal non-related party transaction, including a provision for interest and principal.
4. Set up Fringe benefits
You may want to obtain the equivalent of a cash withdrawal in fringe benefits, which aren’t taxable to you and are deductible by the corporation. Certain medical benefits, disability insurance and dependent care are some examples. Most of these benefits are tax-free only if provided on a nondiscriminatory basis to other corporation employees. You can also establish a salary reduction plan that allows you (and other employees) to take a portion of your compensation as nontaxable benefits, rather than as taxable compensation.
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5. Property Sales
You can withdraw cash from the corporation by selling property to it. However, you should not sell property to a more than 50%-owned corporation at a loss, since the loss will be disallowed. Avoid selling depreciable property to a more than 50%-owned corporation at a gain, since the gain will be treated as ordinary income, not as capital gains. The sale should be done similar to other non-related party transactions and an appraiser may be necessary to value the property
However there are some
Steps to Avoid the Danger:
To avoid constructive dividend/distribution treatment, the owners of a corporation should observe certain formalities when making withdrawals. Where possible, all of the following should be done to ensure loan treatment.
- The withdrawal should be documented as a loan and a legally enforceable promissory note should exist. Valid corporate minutes should exist authorizing the loan.
- Interest should at a minimum be provided for at the applicable federal rate. Collateral should be provided where appropriate.
- The transaction should be shown as a loan on the corporation's books and records. It should be listed on any financial statements of either the shareholder or the corporation.
- Repayments should be made in accordance with the terms of the promissory note. A demand loan should be repaid within a reasonable amount of time. Small repayments and continued growth of the loan, or full repayment at the end of the year followed by renewal of the loan at the beginning of the next year, do not show a true debtor-creditor relationship.
從緊密控股的公司提取現金的五項策略
緊密控股的公司的擁有者通常有興趣以可能的最佳稅率從其企業提取資金。最簡單的方法是將現金分配為股息。但是，股利分配應按照公司的“收益和利潤”徵收股息稅，並且股利不能當公司的開銷扣除。有幾種替代方法可以使您從公司提取現金，同時避免股息處理。以下是要考慮的五種策略：
1.資本償還
如果您已通過債務將公司資本化，包括您已預付給該公司的款項，則公司可以償還債務方式提取現金，而不用將償還的款項視為股息。此外，公司可以扣除債務償還的利息。
確保債務有正確記錄，並具有債務特徵，並且公司債務/權益比率不高，否則還款可能會作為股息徵稅。如果您將來向公司捐款，請考慮將其記錄為債務，以利於以後在稅收優惠的基礎上提款。
2.薪酬補償
企業可以扣除您向公司提供的服務而獲得的您或家人的補償。但是，這對收款人是要徵稅的。這也適用於您從公司獲得的有關財產使用的任何補償，例如租金。在這兩種情況下，就提供的服務或所提供財產的價值而言，補償額必須合理。如果被認為超出部分，將被視爲不可扣抵的公司補償款。
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3.借貸
您可以通過向公司借錢在有利於稅收的情況下從公司提取現金。但是，應將其正確記錄在貸款協議或借據中，以防止其被視為公司股息分配。貸款過程應遵循任何正常的借貸方式交易，包括利息和本金的慣例。
4.設置附加福利
您可能希望獲得相當於附加利益的現金提取，該收益無需向您徵稅，並可從公司扣除該項開銷。某些醫療福利，殘疾保險和受撫養人就是一些例子。只有非歧視地向其他公司僱員提供這些福利中，大多數可以免稅。您還可以建立一個減薪計劃，該計劃允許您（和其他僱員）將您的部分報酬作為非應稅或者延稅福利，而不是應稅薪酬。
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5.資產轉售
您可以通過向公司出售財產來從公司提取現金。但是，您不應虧本出售財產給擁有50％以上股份的公司，因為這種損失是不允許抵稅的。避免將折舊財產出售給擁有50％以上股份的公司，因為該收益將被視為普通收入，而不是資本收益。出售應與其他非它方關聯的正常交易類似，並且評估師可能需要對該物業進行估值
注意有一些借貸項目以避免危險的步驟:
為了避免造成的股息/分配處理，公司的所有者在提款時應遵守某些手續。在可能的情況下，應進行以下所有操作以確保獲得貸款待遇。
- 提款應記錄為貸款，並且應存在法律上可強制執行的借據。保存有效的公司會議記錄以授權貸款。
- 利息至少應按適用的聯邦利率計提。適當時應提供抵押品。
- 交易應顯示為公司賬簿和記錄上的貸款。它應該在股東或公司的任何財務報表中列出。
- 還款應按照借據的條款進行。需求貸款應在合理的時間內償還。小額還款和貸款的持續增長，或者在年末全額還款，然後在次年年初續期貸款，都要顯示出真正的債務人-債權人關係。