More FUD
Year 1
a) you put $10K in to start a C-Corp
b) it buys $5K of equipment
c) it has a profit of $5K before depreciation
d) it takes a section 179 deduction of $5K on the equipment. This results in no taxable income
e) near year-end you withdraw $2K of your capital contribution. is this a taxable or tax-free dividend/distribution
Under IRC Sec 312 the Corp has earnings and profits of $4K. subsection (k)(3)(B) only allows a $1K section 179 deduction for purpose of computing E & P. The IRS would argue this makes that $2K a taxable dividend.
there are many other adjustments required under that tax laws to convert taxable income and retained earnings into E & P. Maybe your C-Corp is one of the lucky ones that requires no adjustments.
