Can the business repay some of the loan even if it doesn't make a profit

[lavtren]

Can a business repay  a loan made by a partner even if the business has a loss at the end of the year

[DavidD66]

Can you clarify the details of the loan?  Is it a loan to the business made by the partner?  If so, yes the business can repay the loan even if it did not make a profit.  If it was different type of loan, please provide additional information.  

[lavtren]

Yes it was a loan to the company by a partner.  There is still a balance on the loan. Also when I loan cash to the business is it considered as a capital cash contribution and when I repay myself is it considered a capital xcash reimbursement. Not sure where to put the amounts in TurboTax Thanks for your help

[MinhT1]

A loan isn't a capital contribution. A loan appears on the liability side of the balance sheet of the business. A loan repayment isn't a capital reimbursement.

If the business files as a partnership (form 1065), the loan is reported on line 19a - Loans from partners of Schedule L.

If the business files as an S-Corp (form 1120S), the loan is reported on line 19 - Loans from shareholders of Schedule L.

[lavtren]

Just to clarify, I do not enter the loan payment in the partnership detail as capital contributed by the partner.

[Vanessa A]

No.  You do not enter the loan payment in the partnership details as capital contributed by the partner.  A capital contribution would be something you gave in exchange for an increase in equity.  A capital contribution is not a loan where there were terms and conditions that you would be paid back.