Discussion:Loan to shareholder and basis question.
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Discussion Forum Index --> Basic Tax Questions --> Loan to shareholder and basis question.
Discussion Forum Index --> Tax Questions --> Loan to shareholder and basis question.
Www.cpa1.biz (talk|edits) said: | 7 June 2009 |
| Almanacers,
I am working with an S corp. They had zero basis in the beginning of 2008. During 2008, they had 20k in credit card expenses that were tied to the company as a loan. This created 20k in basis; however, the S corp gave a 35k loan to the shareholder. I am assuming there is still no basis here for 2008 since the loan of 35k exceeded the 20k loan from shareholder netting to 15k. When a loan is given to a shareholder, does this lower a shareholder's basis? Please advise. | |
| 7 June 2009 | |
| YES! The shareholder owes the S corp $15,000. The shareholder loan acct must have a credit balance in order to have basis, otherwise it's negative. | |
| June 8, 2009 | |
| Yep, I agree with Barb, you're upside down at this point. Make sure it's a real note, bearing interest, etc. or else take it to income as required. | |
| 8 June 2009 | |
| you were already at zero basis. the loan from corp to shareholder might be taxable if no 2008 net income. | |
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