Discussion:Loan to S Corp, not from SH
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Discussion Forum Index --> Basic Tax Questions --> Loan to S Corp, not from SH
Discussion Forum Index --> Tax Questions --> Loan to S Corp, not from SH
| 19 February 2008 | |
| Client loaned her brother money to start S Corp business in 2006. She is probably not a SH, but since he's never filed taxes, I suppose he could make her one if he ever gets around to filing. Business went bankrupt in 2007. Is there any way that she can take this loss (short of having brother file 2 years of taxes, and send her a K1)?
And oh, I guess this qualifies as an urban legend - "I didn't make any money in 2006, 2007, so I didn't file". | |
| 19 February 2008 | |
| If she is a shareholder and loaned money to the S-Corp - then she has basis to take a loss. However, to claim it for her, you're going to have to file the 1120S, issue the K-1's, and then amend her personal returns. I have no direct experience with this, but it may throw up a red flag. | |
| 19 February 2008 | |
| How can he make her a S/H after the fact? Ooops, simply via tax evasion...disregard my question. ;-) | |
| February 19, 2008 | |
| Suppose? WW, you need some mentoring. How did she manage to file the 2553 without her signature? She was not a shareholder. And worse yet, her brother is not at risk for the money, and so he's not entitled to losses on her money either. | |
Scottycoyote (talk|edits) said: | 19 February 2008 |
| agree with jr, brother has no basis or risk so he has no loss. She might have a bad debt if she isnt a shareholder, that she could write off up to 3000 per year, of course she would have to try and collect it from him first, including going to court and seeking judgement. | |
| 19 February 2008 | |
| I agree that she isn't a SH (and she doesn't think she is either). I have serious doubts about how he set up the company at all, but at 10 pm I completely overlooked the fact that she would have to have signed paperwork if she was. We're not his preparer, and frankly don't want to be. I couldn't see anyway for her to take the loss, but was hoping I missed something. I'm sure she won't sue for losses, and I don't blame her, I wouldn't either. I just wanted to make sure I wasn't overlooking some way for her to deduct the loss. | |
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