Moving investments from Fidelity Business Account (S-Corp) to Personal Account - tax implications?

Your accountant is partially right but there are important nuances here. For question 1: It depends on your S-Corp's accounting method. Most small businesses use cash basis accounting, where you generally wouldn't report unrealized gains/losses. If your S-Corp uses accrual accounting, then yes, you might be reporting these unrealized changes. Moving to your personal account would mean you only report when you sell, regardless of accounting method. For question 2: This is trickier. Moving investments from your S-Corp to your personal account is considered a distribution to you as the shareholder. While this doesn't create an immediate tax bill, it may have implications: - It needs to be properly documented as a distribution - It could affect your stock basis in the S-Corp - If distributions exceed your basis, you could have capital gains tax - There may be reasonable compensation issues if you're taking too many distributions compared to salary I'd recommend getting a second opinion and discussing exactly how this would be documented. The mechanics of the transfer matter significantly.

I went through something similar last year with my S-Corp's investment account. I was getting frustrated with having to track all those paper gains and losses. After researching this extensively, I found an amazing tool called taxr.ai (https://taxr.ai) that helped me understand the tax implications better. Using taxr.ai, I uploaded my Fidelity statements and it analyzed my specific scenario, showing me how the transfer would impact my taxes both at the corporate and personal level. It highlighted some things my accountant completely missed about basis calculations! The tool basically confirmed that yes, moving to personal would simplify reporting, but there were other considerations my CPA hadn't mentioned. Their analysis saved me from making a mistake with documentation that could have caused issues during an audit. Definitely worth checking out if you're considering this move.

Just wanted to update that I tried taxr.ai after seeing the recommendation here, and it was incredibly helpful for my situation. I had about $230k in my business Fidelity account and was considering a similar move to personal. The analysis confirmed that yes, moving to my personal account would simplify reporting (no more tracking unrealized gains/losses annually), but it flagged that I needed to be careful about my stock basis. Turns out I hadn't been tracking my S-Corp basis properly, and if I had done the transfer without fixing that first, I could have triggered unexpected capital gains! The tool generated a full report that I shared with my CPA, who actually thanked me because it caught something he'd overlooked. We're proceeding with the transfer now but with proper documentation. Definitely recommended if you're considering this move.

I had a similar situation and getting in touch with the IRS for clarification was a nightmare. After waiting on hold for hours multiple times, I finally used Claimyr (https://claimyr.com) to get through to an IRS agent. They have this service where they navigate the IRS phone system for you and call you back when an agent is on the line - you can see how it works here: https://youtu.be/_kiP6q8DX5c I was skeptical at first, but I was connected to an IRS representative within an hour who walked me through the proper procedure for documenting an S-Corp distribution of investments. She confirmed that while the transfer itself isn't taxable (assuming you have sufficient basis), it MUST be properly documented as a distribution at fair market value, and you need to maintain records of your adjusted basis. This saved me so much headache and gave me the confidence to proceed knowing I was doing it correctly.

I need to eat my words. After struggling to get through to the IRS for weeks about my own S-Corp distribution questions, I tried Claimyr despite my skepticism. Shockingly, they actually got me through to an IRS representative in about 40 minutes. The agent confirmed everything others have said here - the transfer from business to personal is considered a distribution, needs to be at fair market value, and requires proper documentation. But the critical piece I learned is that if your distributions exceed your stock basis, the excess is treated as capital gain (not ordinary income like I thought). I've spent countless hours trying to get through to the IRS myself over the past three tax seasons with no luck. Whatever system or method they're using actually works. Definitely using this again next time I have tax questions the IRS needs to answer.

Something important that hasn't been mentioned yet: make sure you're not violating any loan covenants if your S-Corp has any business loans. I found this out the hard way when I moved assets from my business to personal and triggered a technical default on a business loan that had minimum asset requirements. Also, depending on your state, moving significant assets out of the business could potentially impact liability protection. You might want to consult with a business attorney as well as your accountant.

Has anyone calculated whether this actually saves money in the long run? I'm in a similar situation and trying to figure out if the tax benefits outweigh the hassle of the transfer.

This is a complex situation that really requires careful planning. I went through something similar with my S-Corp about 18 months ago and learned some hard lessons. One thing I don't see mentioned yet is the timing of when you do the valuation for the distribution. The IRS requires you to use fair market value on the date of distribution, but with volatile investments, this can make a huge difference. I made the mistake of not coordinating the valuation date with my transfer, and ended up with a mess when my ETFs dropped significantly between when we calculated the distribution value and when Fidelity actually processed the transfer. Also, make sure your S-Corp election is still valid before doing this. I discovered during my transfer that we had inadvertently violated some S-Corp requirements a year earlier (related to shareholder loans), which could have invalidated our election. Fortunately we were able to fix it retroactively, but it could have been a disaster. My advice: get everything documented in writing from your CPA first, including exactly how they plan to handle the mechanics of the transfer, the valuation method, and how it will be reported on both your business and personal returns. Don't rely on verbal assurances for something this significant.