this has been helpful. My concern stems from the fact the owner is using a heavy dose of expenses (like car, travel, rents, etc.) to reduce the taxable income from the company. Don`t get me wrong, I`m not saying its illegal, but it certainly makes it harder for me to see what the actual owner benefit is. I`ll make sure my accountant takes a good look during due diligence.
Since an S-Corporation passes income through the company to the stockholders (in this case a husband and wife ownership), how can I effectively evaluate the income produced by this small business (if I can`t see the owner`s personal tax return)? I feel like it is very easy for the owner to say, "I only claimed $XX,000 last year on my taxes, but the business really generated $XXX,000 in cash flow to me".