Author Topic: "proof of owner's draw" (Corporation)  (Read 2487 times)

scrubbyfish

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"proof of owner's draw" (Corporation)
« on: June 21, 2016, 09:13:02 AM »
What are some zero-cost proofs of an owner's draw from a Corporation?

An agency wants this from me, but is refusing a T-4 and saying it needs to be "real proof, like a letter from your tax accountant saying what you drew." I don't want to pay my accountant another $150 (three letters per year) to write the same thing the T-4 does.

Do tax assessments usually suffice?
Bank statements showing out from Corp, into personal?
Other?

jwright

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Re: "proof of owner's draw" (Corporation)
« Reply #1 on: June 21, 2016, 10:03:17 AM »
It is on your K-1 for an S-Corporation.  Box 16, code D.

Axecleaver

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Re: "proof of owner's draw" (Corporation)
« Reply #2 on: June 21, 2016, 10:42:23 AM »
A P&L statement, tax returns (Schedule C will document this for you in the US), or minutes from your annual corporate meeting (with yourself, I assume) including a statement from your treasurer (you) about incorporating a statement of the dates, payees and amounts of distributions.

Bank statements seem like corroborating evidence of any of the above; I'd give the P&L statement a shot first. They're easy to throw together and along with bank statements, should meet the criteria of "real proof" you're being asked for.

scrubbyfish

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Re: "proof of owner's draw" (Corporation)
« Reply #3 on: June 21, 2016, 10:44:27 AM »
Thank you both! Will do :)

jwright

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Re: "proof of owner's draw" (Corporation)
« Reply #4 on: June 21, 2016, 01:12:30 PM »
A P&L statement, tax returns (Schedule C will document this for you in the US), or minutes from your annual corporate meeting (with yourself, I assume) including a statement from your treasurer (you) about incorporating a statement of the dates, payees and amounts of distributions.

Bank statements seem like corroborating evidence of any of the above; I'd give the P&L statement a shot first. They're easy to throw together and along with bank statements, should meet the criteria of "real proof" you're being asked for.


Since owner distributions are not expenses for a flow through entity they are not included on a P&L.  Also a Corporation would not file a Schedule C.

If this is a C-Corporation, owner "draws" would have to be salary or dividends.  In an S-Corp, they are reported on your K-1 for you personally, and the total draws for all shareholders would be reported on Schedule K of the 1120.

scrubbyfish

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Re: "proof of owner's draw" (Corporation)
« Reply #5 on: June 21, 2016, 01:37:14 PM »
I'm in Canada, but looking through my docs for the equivalents of what you folks are explaining.

My draw is salary.
In the Corp's tax return, there is no schedule for just salary (or other owner draws).
I don't want to provide one of the existing sheets with all journal entries, as that only confuses them profoundly.

I'll write them my own letter as secretary/treasurer and submit that.

Why they won't accept a T4, I don't know.
It's prepared by the accountant, and the official document required and accepted by the CRA.
But such is is life!

Sibley

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Re: "proof of owner's draw" (Corporation)
« Reply #6 on: June 21, 2016, 02:02:38 PM »
It sounds like your T-4 is equivalent to the US W-2. If an agency wouldn't accept a W-2 as proof of income, then I'd ask them why they thought they were better than the IRS.

scrubbyfish

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Re: "proof of owner's draw" (Corporation)
« Reply #7 on: June 21, 2016, 03:45:49 PM »
Yep! Craziness. They confirmed that if I invent a letterhead and write a note with the same figure on that, that will suffice..  How that's better than a T4, only they can know!