Removing Additional Paid in Capital from S-Corp

[fgt]

Hello, can additional paid in capital be returned to the shareholder at any time?

If so, would the draw just be coded to additional paid in capital, rather than shareholder distributions?

[Anonymous_ · Accepted solution]

It is a distribution, regardless.

@Rick19744 

[Rick19744]

Concur with @Anonymous_ 

[fgt]

Thank you both!

I think I got it.  So either way, the SH distribution reduces your basis, but the additional paid in capital account remains at whatever amount has been put into it? 

[Rick19744]

Correct.  

You should have a separate account that reflects distributions to shareholders; an equity account.

This separate account essentially is tied to the retained earnings and would be summarized into this account on the balance sheet for the 1120-S tax return.