Arkansas Finance Department Determines S Corporation’s Distributions Need Not Be Reported as Dividends

The Arkansas Department of Finance and Administration (DFA) Nov. 9 determined in a supplemental letter ruling the taxability of distributions made by an S corporation in a tax year where its accumulated adjustment account (AAA) maintained a positive balance for individual income tax purposes. Taxpayer, an S corporation, requested a binding opinion on the taxability of the 2019 distributions when it had a positive AAA balance. The DFA found that: 1) it can issue opinions that deal with legal concepts related to income tax and don’t require specific calculations or audit of the client’s income tax returns; 2) an S ...