Discussion:100% s/h S Corp interest on personal fin stmt???
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Discussion Forum Index --> Tax Questions --> 100% s/h S Corp interest on personal fin stmt???
KatanDalet (talk|edits) said: | 15 August 2006 |
| When compiling a personal financial statement for a 100% shareholder of an S Corporation, how/where does this amount go (presuming it must be included somewhere)? The S Corp has $1000 capital stock issued, but $90,000 negative retained earnings. What number must be included on the personal financial statement? There is a $70,000 loan to S corp from s/h on B/S plus other liabilities. Minimal assets (cash only). Would the loan be shown as a receivable on the PFS and as a negative asset for retained earnings? I am clueless.
Since clueless, I WILL be taking the AICPA CPE on this subject. And I have ordered the AICPA SOP 82-1. However, it will be several days before delivery of the SOP (which would hopefully answer my question). So I really need an answer right away, if possible. I hate to tell my client, "I'll get back with you next week after the mail runs!" AICPA can't fax or email the SOP to me. Mail only. Thanks in advance! | |
| 16 August 2006 | |
| It's been awhile since I have looked at this, but I believe personal financial statements are stated at FMV. So you need to determine what the FMV of the corporation is, as well as the FMV of the loan. Could be that the corporation is valued at $0, as is the receivable from the corporation, if the corporation does not have the ability to repay the loan. Some of those lurking in this site are GAAP-heads, but most are probably more familiar with tax issues than GAAP issues. | |
| 16 August 2006 | |
| It must be included if it comprises a large portion of a person's total assets. It should be shown seperately from other investments. An investment in a separate entity which is marketable as a going concern (e.g.,closely held corporation) should be presented as one amount. If the investment is limited business activity, not conducted in a separe business entity, seperate asset and liabililty amounts should be shown (e.g., investment in real estate and related mortgage). Of course, only the person's beneficial interst in the investment is included in their PFS.
Source: Wiley CPA Examination Review | |
| 16 August 2006 | |
| If separately stated, the loan receivable should be footnoted on collectability. | |
| 16 August 2006 | |
| As Jdugan pointed out, personal financial statements are presented at FMV. This becomes interesting when dealing, in this case, with the actual valuation of a business. That would, of course, be the FMV of the S-Corp stock. Be wary of whether the loan to the Corp is actually a loan and not a capital contribution (interest paid/accrued regularly, formal agreement in writing, etc.). This would effect whether or not it is shown as a loan receivable on the client's PFS. | |
KatanDalet (talk|edits) said: | 18 August 2006 |
| Thanks to ALL for your help! I really appreciate it. | |
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