In this question about s-corp distributions, the answer was given that an s-corp taxes all profit as personal income. That is, there are neither distributions nor dividends which can be taxed at a capital gains tax-rate.
However, I've easily found web sites that say the opposite.
- This one talks about long-term capital gains with an S-Corp. A loan is one example chosen.
- This one mentions long-term capital gains of the S-corp become long-term cap gains by shareholders
- This one explains that a non-dividend distribution, beyond your "tax basis", is treated as a capital gain (rather than personal income, which other sites mention). The specific quote is:
If a shareholder receives a non-dividend distribution from an S corporation, the distribution is tax-free to the extent it does not exceed the shareholder's stock basis. If the distribution exceeds the shareholder's stock basis, the excess amount is a capital gain (short-term or long-term depending on how long the stock was held. If one year or less, it's a short-term capital gain, if held more than one year, it's a long-term capital gain
I am particularly interested in that last point; I understand the capital gains rate is often lower than the personal income tax rate. How do I tap into this?