S-Corp and distributions
Does the corporation need the money for its ongoing business? If so, don't transfer it. If not, feel free. This decision has nothing to do with whether the corporation made money in any particular year.
No there is no way to have untaxed earnings.  Single Member LLC are taxed on your personal taxes.  Partnership LLC is taxed on your and your partners personal taxes.  An C-Corp LLC has its own tax bracket.  An S-Corp is taxed on your personal taxes (but does not get taxed as self-employment taxes).   At $500,000, YOU SHOULD BE AN S-CORP or C-CORP to save on self-employment taxes. "If you have an S-Corp with several shareholders - you probably also have a tax adviser who suggested using S-Corp to begin with.  You're probably best off asking that adviser about this issue. If you decided to use S-Corp for multiple shareholders without a professional guiding you, you should probably start looking for such a professional, or you may get yourself into trouble. That said, and reminding you that: 1. Free advice on the Internet is worth exactly what you paid for it, and 2. I'm not a tax professional or tax adviser, you should talk to a EA/CPA licensed in your state, here's this: Generally S-Corps are disregarded entities for tax purposes and their income flows to their shareholders individual tax returns through K-1 forms distributed by the S-Corp yearly. The shareholders don't have to actually withdraw the profits, but if not withdrawing - they're added to their cost bases in the shares. I'm guessing your corp doesn't distribute the net income, but keeps it on the corporate account, only distributing enough to cover the shareholders' taxes on their respective income portion. In this case - the amount not distributed is added to their basis, the amount distributed has already been taxed through K-1. If the corporation distributes more than the shareholder's portion of net income, then there can be several different choices, depending on the circumstances: The extra distribution will be treated as salary to the shareholder and a deduction to the corporation (i.e.: increasing the net income for the rest of the shareholders). The extra distribution will be treated as return of investment, reducing that shareholder's basis in the shares, but not affecting the other shareholders. If the basis is 0 then it is treated as income to the shareholder and taxed at ordinary rates. The extra distribution will be treated as ""buy-back"" - reducing that shareholder's ownership stake in the company and reallocating the ""bought-back"" portion among the rest of the shareholders. In this case it is treated as a sale of stock, and the gain is calculated as with any other stock sale, including short-term vs. long-term taxation (there's also Sec. 1244 that can come in handy here). The extra distribution will be treated as dividend. This is very rare for S-Corp, but can happen if it was a C-Corp before. In that case it will be taxed as dividends. Note that options #2, #3 and #4 subject the shareholder to the NIIT, while option #1 subjects the shareholder to FICA/Self Employment tax (and subjects the company to payroll taxes). There might be other options. Your licensed tax adviser will go with you through all the facts and circumstances and will suggest the best way to proceed." The only possibility that I've seen in the past is if some of the income is for deferred services which are to be delivered in the following tax year, a portion of the income can be deferred.  Also, agree that you should be an S-corp and talk to another CPA if yours hasn't told you that yet. I am a registered S-corp but for alot of industries that threshold is too low (I'm in housing) &gt;Do you have any insight on average *effective* rates paid by SE owners? &gt; &gt;As a counterpoint to your (very valid) links, filing as S-corp allows for taxes on distributions to be exempt from payroll tax and taxed at much lower rates. Also, being SE allows for various deductions not possible for wage earners. There's probably other examples not immediately coming to mind. &gt; &gt;Also, SE taxes equal taxes otherwise paid by employer + employee. It's just that those employer taxes don't appear on the employee's paystub so not everyone realizes this.   The article I posted also doesn't take into account state taxes, do example non deductible B&amp;O, end user Sales tax or  impact fees... That Employees don't pay or often even know about, yet some of us small business owners are also employees, so we get double taxed... I believe this depends on the broker's policies. For example, here is Vanguard's policy (from https://personal.vanguard.com/us/whatweoffer/stocksbondscds/brokeragedividendprogram): Does selling shares affect a distribution? If you sell the entire position two days or more before the dividend-payable date, your distribution will be paid in cash. If, however, you sell an entire position within the two day time frame of the security's payable date, the dividend will be reinvested, resulting in additional shares. Selling these subsequent shares will require another sell order, which will incur additional commission charges. Dividends which would have been reinvested into less than one whole share will be automatically liquidated into cash. If you want to guarantee you receive no fractional shares, I'd call your broker and ask whether selling stock ABC on a particular date will result in the dividend being paid in shares. As an ordinary shareholder, yes you are protected from recourse by the debtors. The maximum amount you can lose is the amount you spent on the shares. The rules might change if you are an officer of the company and fraud is alleged, but ordinary stockholders are quite well protected. Why are you worried about this? The sentence you quoted does not apply in the case where you sell the stock at a loss. In that case, you recognize zero ordinary income, and a capital loss (opposite of a gain) for the loss. Reference: http://efs.fidelity.com/support/sps/article/article2.html SXL is a Master Limited Partnership so all of the income is pass-through.  Your equity purchase entitles you to a fraction of the 66% of the company that is not owned by Energy Transfer Partners.  You should have been receiving the K-1s from SXL from the time that you bought the shares.   Without knowing your specific situation, you will likely have to amend your returns for at most 6 years (if the omitted amount of gross income exceeds 25% of your gross income originally stated as littleadv has graciously pointed out in the comments) and include Schedule E to report the additional income (you'll also be able to deduct any depreciation, losses etc. that are passed through the entity on that form, so that will offset some of the gains).  As littleadv has recommended, speak with a tax professional (CPA/EA or attorney) before you take any further steps, as everyone's situation is a bit different. This Forbes article has a nice overview of the MLP.  There's a click-through to get to it, but it's not paywalled.