Posted by James Buster on August 27, 2002 at 22:20:32:
If your C Corp were, for example, to receive management fees from a related entity, you might write the management contract such that the maximum earned fee is capped, remarkably enough, at the anticipated level of annual expenses plus a little bit just in case you misestimate.
Benefits for officers of an S Corp. - Posted by Lyal
Posted by Lyal on August 23, 2002 at 09:07:05:
I have medical insurance through my day job but have the co-payments, deductibles, maximum allowances, expenses for eye care etc. that I need to pay out-of-pocket. Assuming I have the proper Corporate resolution in place, can I pay those extra expenses with pre-tax dollars from the S Corp?
Thanks again, Lyal
Re: Benefits for officers of an S Corp. - Posted by Jim - VA
Posted by Jim - VA on August 23, 2002 at 12:27:21:
Lyal,
Nice to meet you.
Employee benefits to a greater than 2% shareholder of an S Corp are taxable to the shareholder. You still might be able to deduct some of these costs on your individual tax return (i.e. - self employed health insurance) but you will not save taxes doing it in an S Corp.
Your idea would work in a C corp.
Good investing,
Jim - VA
Re: Benefits for officers of an S Corp. - Posted by JHyre in Ohio
Posted by JHyre in Ohio on August 24, 2002 at 08:13:31:
Good answer, glad to have you posting here.
John Hyre
Re: Benefits for officers of an S Corp. - Posted by Lyal
Posted by Lyal on August 23, 2002 at 13:17:49:
Jim,
Likewise and thanks much for the info. Maybe I should think about setting up that C Corp for “management consulting” to my S Corp…B-)
All the best, Lyal
Re: Benefits for officers of an S Corp. - Posted by Jim - VA
Posted by Jim - VA on August 23, 2002 at 13:25:47:
Using the C Corp is not a bad idea. Some people on this site like the C corp because the tax rate is lower than an individual. Personally, I don’t like C corps because it’s expensive compared to S corps and LLCs to get money out of them.
Some people with C Corps have the “uncanny” ability to match their annual revenues to annual expenses so there is very little profit left over in the C corp. If you can budget that effectively, you might find a C Corp to be helpful.
Good luck,
Jim - VA