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Discussion Forum Index --> Tax Questions --> Loans to Shareholder or Paid-in Capital?
Bean (talk|edits) said:
| 12 March 2006
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| Two shareholders put in some cash of $8000 from their personal account to the new business S-Corp for start-up expenses and to open business checking accounts. Is this $8000 Loans to Shareholder or Paid-In Capital or something else? Currently no documents to support that it is a loan. Please advise.
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JR1 (talk|edits) said:
| 12 March 2006
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| Paid in Capital. Notwithstanding an argument or two you'll find here, initial capitalization of a corp CANNOT include debt.
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Bean (talk|edits) said:
| 12 March 2006
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| Can they take that money out later for personal use, but not as distribution, just a negative Paid-In Capital, because it was their personal money to begin with?
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Taxref (talk|edits) said:
| 12 March 2006
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| No. Since paid in capital is not a loan it cannot be withdrawn without following the rules for distributions. I would add that part of the shareholder's initial contribution should be allocated to stock.
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Bean (talk|edits) said:
| 12 March 2006
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| Under Capital Stock on the Balance Sheet? Even though, no shares of stock were issued or authorized when the company was incorporated? It is an LLC, later filed for S Corp.
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