S Corp Earnings

[SCorp]

I live in the State of Texas. I am a minority shareholder in an "S" Corporation. In 1997, and in 1998, the S corp reported earnings, as income, to the IRS. This income was never, and has never been paid to me. I paid taxes on this income that I never recieved. Is this legal for an "S" Corporation to do? Is there any recourse for me to ever see those earnings? This company has not had a shareholder's meeting since 1996.

 

[lg2]

Well, if they have illegitimately reported income, you need to see if you can sue to get that practice stopped, and any owed income paid
why have you waited?

 

[ed]

The taxable income reported to you from an S corp. is your pro-rata share of earnings of the corporation. That amount is reported as your taxable income whether or not it has been distributed to you. Taxable income and cash on hand may have little relation in a corporation. The fact that the corporation had earnings, which were "passed-on" to you as a shareholder does not mean they have cash for distributions. I would suggest you first ask the president or the accountant why there have been no distributions to you before taking any other steps. There could be legitimate business reasons. Also, as a shareholder, the books should be available to you during business hours upon reasonable notice.