Fullerton, CA asked in Tax Law for California

Q: I am a partner with a company. They report annual distribution through K1 in my name. Can that become income to my S cor

If I start a S corp or that K1 should be issued in my S corp name, specifically?

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1 Lawyer Answer
D. Steven Yahnian
D. Steven Yahnian
  • Tax Law Lawyer
  • Visalia, CA
  • Licensed in California

A: If your S Corporation becomes a partner in the partnership, then your S Corporation will report the income from the partnership as evidenced by K-1 issued to it by the Partnership. Then, you will report the income on your K-1 from the S Corporation because the partnership income passes through to the S Corporation and then the S Corporation income passes through is reported by its shareholder. By the way, California imposes a 1.5% net income tax on S Corporation net income.

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