How do I write off cash investments into my S corp as a loan?

[wjlinville]

My S corp which I'm 100% owner of had negative net income last year.  I took no salary, there were no distributions, and contributed about $7,000 to pay bills.  I'd like to understand where I reflect this on my tax forms.  Is it the K-1?

[Rick19744]

The "loan" you made to the S corporation is not an expense.  The expense(s) come into play when that money is spent by the S corporation.

What you need to do is record that loan on the books of the S corporation; the balance sheet.  The entry would be to DR. Cash and Cr. Loan Shareholder.

You should also charge the S corporation interest for the use of the funds.  Any interest paid by the S corporation would be an expense for the S corporation and interest income on your personal tax return.  If you don't have a note between the corporation and you with an interest rate, then the IRS could take the position that this is not a loan but in fact a capital contribution.  Probably not significant since you are the only shareholder and most likely have always been an S corporation.  It would be cleaner with a note and interest.