Pass-Through Distribution
Corporate profits distributed to shareholders without being subjected to federal self-employment or FICA taxes.
From Old French 'passer' + 'distribuer' (to divide up, apportion).
Comprehensive Usage Guide
Dual Nuance AnalysisProfits earned by pass-through tax entities (S-Corporations, partnerships) allocated directly to owners' personal tax returns without entity-level taxation.
“The partners withdrew fifty thousand dollars each as a pass-through distribution on Form 1065 Schedule K-1 after paying their quarterly tax estimates.”
The mechanism solo operators use to lawfully bypass the 15.3% self-employment tax on earnings exceeding their defensible W-2 wage.
“A compliant founder structures income between a defensible market salary and tax-advantaged pass-through distributions.”
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Entity Structuring for Secondary Ventures: The S-Corp Tax Trap for High W-2 Earners
..., instantly restoring the massive mathematical value of the S-Corp distribution shield. Until a secondary venture reaches consistent six-figure profitability, electing S...
"S-Corp distribution"Read Full Context