Partnership vs. S Corp | How Basis Can Make or Break Your Tax Bill
Partnership vs. S Corp | How Basis Can Make or Break Your Tax Bill  
Podcast: Small Business Tax Savings Podcast
Published On: Wed Jul 23 2025
Description: Send us a textTaking money out of your business isn’t always tax-free. If you’re not tracking your basis, you could get hit with a surprise capital gains tax, even without selling anything. Let's break down what basis means, how it works differently for Partnerships and S Corps, and why overlooking it could cost you thousands. 🚀 Book your free demo call today! Click here or visit: https://taxelm.com/demo/ Chapters:(01:06) What Is Basis and Why It Matters Your basis determines how much you can take out of your business tax-free and how much loss you can deduct.(01:44) Client Story: The $7K Surprise Tax Bill A business owner thought their S Corp distributions were tax-free—until a capital gains bill showed up.(02:23) Calculating Basis: Partnership vs. S Corp Mike walks through the formula for both. Spoiler: only partnerships include debt in basis.(06:20) Real-Life Example: Same Business, Different Outcome Two identical businesses. One pays capital gains, the other doesn’t. The difference? Entity type.(07:44) Why Basis Gets Miscalculated Loans, poor bookkeeping, and switching accountants are common culprits behind basis errors.(09:25) Planning Tips to Avoid Basis Mistakes Track your basis annually, keep clean books, adjust distributions, or structure shareholder loans when needed.Podcast Host:Mike Jesowshek, CPA – Founder and Host of Small Business Tax Savings PodcastJoin TaxElm: https://taxelm.com🚀 Visit:  https://www.TaxSavingsPodcast.com 🚀 Check Out TaxElm: https://taxelm.com/🚀 Join our Free Facebook Group: https://www.facebook.com/groups/taxsavings/🚀 YouTube: www.TaxSavingsTV.com👋🏼 GET IN TOUCHYou can Tweet @MJesowshek with any feedback, ideas, or thoughts about the lessons you've learned from the episodes. We want to thank you personally for tuning in 🙏🙏 LEAVE A REVIEWIf you enjoy the podcast, please leave a 5-star review on Apple Podcasts or Spotify—it helps more business owners find the show ⭐🎙 ABOUT THE PODCASTThe Small Business Tax Savings Podcast is your go-to resource for cutting-edge tax strategies to help entrepreneurs legally slash their tax bills. Hosted by Mike Jesowshek, CPA, this show breaks down complex tax topics into clear, no-fluff insights so you can keep more of your hard-earned money.