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Yes, irasmilo, I am pretty sure I am missing something. Let me think out loud here for a minute.

Scenario 1.
End of year, $10,000 left in company, cash. Sch. K distribution to me $10,000 counts as my income, I pay taxes on it, so I usually write myself a check for that amount. My total in pocket $5000 (say marginal combined 50% State and Federal tax rate - round numbers)
Next year I loan the Co. $10,000 to pay lawyers.
Total cost: $15,000 (incl tax).

Scenario 2.
End of year, $10,000 left in company, cash. I leave it there somehow.
Next year I pay lawyers with it.
Total cost: $10,000.

Where am I going wrong? (Probably the bit where the patent guy tries to save money doing his own company taxes... :) but still!

Thanks again
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