S corp owners contributions

2 replies
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If an owner deposits his money to pay for business expenses how does it affect his tax returns.

Benefit Assist Online

user17708643219

Level 8

There will be no direct effect on your tax return, but this will count as a owner contribution (aka capital contribution) which will increase your basis in the company. Your basis in the company comes into play whenever the company shuts down, you sell your shares, or when you're taking losses.

Mike9241

Level 15

The S-Corp will issue a K-1 each year. Losses are limited to the lesser of tax basis or the amount at-risk. If there are losses and or distributions, the IRS requires completion of Form 7203. All desktop versions support these forms, but only the premium version when using online.

Warning with 2025 versions, Form 7203 does not work properly to limit losses to basis. If at-risk is lower, you need to complete Form 6198.

Contributions constitute tax basis and the amount at-risk. However, for at-risk the amount must be reduced if there's anything in place that would limit the amount you could lose.

Mike9241