BarbS Posted September 8, 2007 Report Share Posted September 8, 2007 I am finishing 1120S return. Dump truck business started Sept. 2005 as a partnership. Changed to 1120S for 2006. The business had a loss of $635 for 2006. The shareholders (2) made contributions to their church in the amount of $12,377 through the corporation. This causes the AAA account at end of year to be $(13,012). The shareholders equity in business is as follows: Stock - $1000, Add. Paid-in capital $15,058, and loan from shareholders $17,000. I do not do many 1120S returns and have never had a situation like this. Are there special considerations in a situation like this? Any comments will be appreciated. I don't feel comfortable about this. Quote Link to comment Share on other sites More sharing options...
OldJack Posted September 10, 2007 Report Share Posted September 10, 2007 If I understand your numbers and assuming shareholders have equal tax basis (1000+15058-635-12377+17000=20045) in the S-corp, then there is not a problem. The charity contribution goes on Sch-K and K-1 line 13 with the K-1 with one of the codes of 13A thru 13F depending upon the type of charity contribution. The contribution reduces each shareholders tax basis but it appears that as a group each has enough tax basis that it is not a problem . The AAA account on the books/tax return of the S-corp is allowed to have a negative number, it is the individual's AAA account "share" when related to his/her deduction and tax basis on the 1040 that cannot be negative. Nothing was really accomplished with the S-corp making the contribution since it is passed thru and deducted on the 1040 Sch-A. Quote Link to comment Share on other sites More sharing options...
BarbS Posted September 13, 2007 Author Report Share Posted September 13, 2007 If I understand your numbers and assuming shareholders have equal tax basis (1000+15058-635-12377+17000=20045) in the S-corp, then there is not a problem. The charity contribution goes on Sch-K and K-1 line 13 with the K-1 with one of the codes of 13A thru 13F depending upon the type of charity contribution. The contribution reduces each shareholders tax basis but it appears that as a group each has enough tax basis that it is not a problem . The AAA account on the books/tax return of the S-corp is allowed to have a negative number, it is the individual's AAA account "share" when related to his/her deduction and tax basis on the 1040 that cannot be negative. Nothing was really accomplished with the S-corp making the contribution since it is passed thru and deducted on the 1040 Sch-A. Thanks Old Jack. That's what I thought but wanted someone else's opinion. Quote Link to comment Share on other sites More sharing options...
veritas Posted September 13, 2007 Report Share Posted September 13, 2007 Question? If the contribution was made by the corporation, who is on the receipt that they must have? Quote Link to comment Share on other sites More sharing options...
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