Question

Tax Year Prior to 2020: I need to make a payment for the purchase of an S Corp that I bought. Can I pay it out of the corporate account and deduct it as a business expense?

Forum|Forum|6 years ago
March 9, 2020
1 reply
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TurboTax Live Self Employed

No not really. From your question, I don't believe this is an S corp buying another S corp which is completely a different tax treatment.

What I believe you are saying is that you bought an S corp for cash. In that case, that money should represent your equity in the new S corp.

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W

walmartshopperAuthor

Yes, I bought an S corp with an agreement to pay back the sale price over several years. Do those payments to the previous owner count as an expense of the business or do they have to come out of my personal account?

V

VictorW9

Yes, they should come from your personal account. If you have cash in the S corp, you can always take a drawing. Effectively ending up being the same as if you were physically withdrawing the money from your personal.

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