Q: I'm switching my business from a C corporation to an S corporation. I understand that S corporations don't pay any tax. Will I need to make quarterly tax payments? A.P., Cincinnati
A: Possibly. Even though income and deductions are passed through to individual shareholders of your S corporation, the S corporation still must make quarterly installment payments of estimated tax if it owes $500 or more for tax on certain built-in gains, excess net passive income tax and the investment credit recapture tax. For instance, your company may owe the BIG (built-in gains) tax if it owns assets that appreciated in value while the company operated as a C corporation. Tip: For more on estimated taxes, visit www.irs.gov/faqs/faq-kw62.html.
- Small Business Tax Deduction Strategies No matches