Question

When operating a business the owners usually take distributions of money or property from their business.

What is the taxability of distributions of money or property from the business to the owner?

Answer 1

In the given case the owners of the organisation are sharing the money and property in the course of bussiness . There is transfer of money and transfer of property from bussiness to owners.

We discuss each one seperately

1. Tax implications on the transfer of money from bussiness to owners

A. Here the money taken by the owners from the business can be in a form of drawings or dividend in rare cases it can be show as loans

B. In case of drawing the amount taken by owners is taxable as income in hands of owner

C. In case of dividend if the company issued dividend after payment of dividend distribution tax them that dividend is not taxable under the income of share holders if the company issued dividend without payment of dividend distribution tax then that dividend is taxable

D. In case of loans there is no tax liabilities.

2. In case of transfer of property.

1. In case of transfer of property the transfer get attracts the capital gains implication.

2. Owners of the bussiness has to pay income tax under capital gains for the value of transferred property.

These are all the information required to solve the given question.

I hope, all the above given information and explanations are useful and helpful to you.

Thank you.