Discussion:SHAREHOLDER LOANS TO S CORP
From TaxAlmanac, A Free Online Resource for Tax Professionals
Note: You are using this website at your own risk, subject to our Disclaimer and Website Use and Contribution Terms.
From TaxAlmanac
(Difference between revisions)
| Revision as of 04:49, 13 March 2007 Gmacdon167 (Talk | contribs) (Interest is not) ← Previous diff |
Revision as of 05:10, 13 March 2007 MsTwizz (Talk | contribs) (I just ask becau) Next diff → |
||
| Line 17: | Line 17: | ||
| Clear as mud, I know, but I had a few of those beverages you were talking about earlier.}} | Clear as mud, I know, but I had a few of those beverages you were talking about earlier.}} | ||
| + | |||
| + | {{ForumReplyPost|UserID=MsTwizz|Date=13 March 2007|Text=I just ask because some of my s-corp clients have a shareholder loan and some use the capital contributions. I'm still new at this and learning......more wine please?}} | ||
Revision as of 05:10, 13 March 2007
Discussion Forum Index --> Tax Questions --> SHAREHOLDER LOANS TO S CORP
BARBOLEARY (talk|edits) said: | 12 March 2007 |
| I have a new S Corp client. He told me that he is planning on making period loans to the company on an as-needed basis. He will receive annual interest based on the balance and get repaid as the company sees fit (meaning $500 here or $400 there, when it can afford it). Can he do this?
I was under the impression that a personal loan to a S Corp should be for a specified amount of money. Can he make intermittent loans as he said? Is this legal? How would you handle this? | |
| March 12, 2007 | |
| Sure, no problem. At year end, document the loan balance, issue a 1099INT for the interest paid to him. No worries. | |
| 13 March 2007 | |
| Yup -- sounds about right to me JR1 (of course that is the way I do it as well...) | |
| 13 March 2007 | |
| Barb-this is fine. I have an 1120S client that takes draws all year, he pays the same 941 amount each month, we file payroll taxes every quarter , then at the end of the year, I get his books and find he took more draws then he should have. We take it against his loan and issue him 1099 int. | |
| 13 March 2007 | |
| Is it better to have a shareholder loan? I booked my investment into my S corp as a capital contribution. It seems that it may be better to have the investment booked as a loan to the corp, with the corp paying me interest. | |
Gmacdon167 (talk|edits) said: | 13 March 2007 |
| Interest is not paid on "capital contributions" as they are just that, "capital contributions." Repayments are a return of capital and reduce stock basis, while contributions increase stock basis. Loans are loans, increasing basis only to the extent that they are needed to take losses. At that point, repayments are capital gain items as a percentage of stock basis vs loan basis.
Clear as mud, I know, but I had a few of those beverages you were talking about earlier. | |
| 13 March 2007 | |
| I just ask because some of my s-corp clients have a shareholder loan and some use the capital contributions. I'm still new at this and learning......more wine please? | |
