Terry D EA Posted January 21, 2008 Report Share Posted January 21, 2008 Good morning to all. If a shareholder of an S-Corp loans the S-Corp money for operational purposes and the loan is repaid by the S-Corp with interest, is the Shareholder's basis impacted in any way? My take is the bais is not impacted as this is a "loan" and not an investment. Any help is appreciated. Thanks, Terry D. Quote Link to comment Share on other sites More sharing options...
OldJack Posted January 21, 2008 Report Share Posted January 21, 2008 A shareholder loan to a S-corp does not in fact create or add to basis. However, for purposes of deducting a S-corp loss it is considered as at-risk basis for allowing the loss deduction. Repayment of the debt reduces basis from the standpoint that the interest paid is an expense and any net expense/loss would decrease basis. Quote Link to comment Share on other sites More sharing options...
KEYWEST_RICKS Posted January 21, 2008 Report Share Posted January 21, 2008 Also, if you repay a loan that has zero basis, (due to the fact that you have used it to deduct losses) you create income. jeff Quote Link to comment Share on other sites More sharing options...
OldJack Posted January 22, 2008 Report Share Posted January 22, 2008 Also, if you repay a loan that has zero basis, (due to the fact that you have used it to deduct losses) you create income. jeff Well.. not in all cases such as your basis and loan deduction has been restored due to profit for the year. - Remember: Everyone seems normal until you get to know them. Quote Link to comment Share on other sites More sharing options...
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