Tax

Distribution

A distribution is a payment of cash or property from an entity to its owners or beneficiaries. For a partnership or S corporation, the tax treatment depends on the owner's basis and the entity's earnings.

Reviewed November 3, 2026

Why it matters

A distribution is not always taxable, and it is not the same as a salary. The entity and the owner need the distribution records to calculate basis and the K-1.

Example

An S corporation distributes $30,000 to its owner after paying a reasonable salary. The distribution is generally tax-free to the extent of the owner's basis.

Related terms

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Sources

Checked November 3, 2026. Public pages and tax rules change; confirm them before relying on them.

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