105-131.6. Distributions.
(a) Subject to the provisions of subsection (c) of this section, a distribution made by an S Corporation with respect to its stock to a resident shareholder is taxable to the shareholder as provided in Parts 2 and 3 of this Article to the extent that the distribution is characterized as a dividend or as gain from the sale or exchange of property pursuant to section 1368 of the Code.
(b) Subject to the provisions of subsection (c) of this section, any distribution of money made by a corporation with respect to its stock to a resident shareholder during a post-termination transition period is not taxable to the shareholder as provided in Parts 2 and 3 of this Article to the extent the distribution is applied against and reduces the adjusted basis of the stock of the shareholder in accordance with section 1371(e) of the Code.
(c) In applying sections 1368 and 1371(e) of the Code to any distribution referred to in this section:
(1) The term "adjusted basis of the stock" means the adjusted basis of the shareholder's stock as determined under G.S. 105-131.3.
(2) The accumulated adjustments account maintained for each resident shareholder must be equal to, and adjusted in the same manner as, the corporation's accumulated adjustments account defined in section 1368(e)(1)(A) of the Code, except that:
a. The accumulated adjustments account shall be modified in the manner provided in G.S. 105-131.3(b)(1).
b. The amount of the corporation's federal accumulated adjustments account that existed on the day this State began to measure the S Corporation shareholders' income by reference to the income of the S Corporation is ignored and is treated for purposes of this Article as additional accumulated earnings and profits of the corporation.
Copyright ©2024 LegalFix. All rights reserved. LegalFix is not a law firm, is not licensed to practice law, and does not provide legal advice, services, or representation. The information on this website is an overview of the legal plans you can purchase—or that may be provided by your employer as an employee benefit or by your credit union or other membership group as a membership benefit.
LegalFix provides its members with easy access to affordable legal services through a network of independent law firms. LegalFix, its corporate entity, and its officers, directors, employees, agents, and contractors do not provide legal advice, services, or representation—directly or indirectly.
The articles and information on the site are not legal advice and should not be relied upon—they are for information purposes only. You should become a LegalFix member to get legal services from one of our network law firms.
You should not disclose confidential or potentially incriminating information to LegalFix—you should only communicate such information to your network law firm.
The benefits and legal services described in the LegalFix legal plans are not always available in all states or with all plans. See the legal plan Benefit Overview and the more comprehensive legal plan contract during checkout for coverage details in your state.
Use of this website, the purchase of legal plans, and access to the LegalFix networks of law firms are subject to the LegalFix Terms of Service and Privacy Policy.