How is income separated between business income and S-Corp income?
My friend is a professional snowboarder who set up an S Corp last year at his accountant's insistence. He has parted ways with the accountant and wants to file on his own, but on the "Income tax summary" he received from his accountant last year, there is "Business income" and "Rent, royalty, partnership, SCorp, Trust" income and he has amounts in both areas. My question is how the accounant determined which amounts belonged in which areas–his income comes directly from his sponsors and he gets 1099 forms from them, and the only other income he has is from contest wins. He is the only owner/employee of the SCorp and does not have any complex accounting issues. I pretty much just want to know if income needs to be separated (onto Schedules C and E) and how this is done.
Thanks!
You need to take this to a CPA or Enrolled Agent (EA) for the tax prep. The old accountant probably did it that way to lessen the self-employment tax. A tax pro needs to look at the 1120S and K-1. No one can answer this accurately on this forum w/o the primary docs.
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