How do I report "Gain from Loan repayments" amount (Shareholder Basis Worksheet, Line 17- attached to K-1 from S Corp) on my personal income tax return?

[Rick19744]

Can you provide some additional information:

Did you loan money to the S corporation?
Are you receiving loan repayments?
Is or has the S corporation generating losses?
Did you use loan basis to deduct S corporation losses in past years?
Do you have any regular basis in your S corporation investment?
Does the individual that prepares the S corporation return also maintain your S corporation basis?

[TexasKathleen]

(1) Yes, I loaned money to the S corp. (2) This is the first year I received loan repayments. (3) I have used loan basis to deduct S corp losses in prior tax years. (4) Unsure- what that means. (5) Yes.

[Rick19744 · Accepted solution]

Ok.  Assuming that this individual is maintaining your basis and understands how to arrive at the amount that is being reported on line 17 of your K-1, this is capital gain and reported on your 1040 Schedule D and applicable 8949.

Just show the "gain" amount from line 17 as the proceeds with a zero cost basis.  You can just use the name of the S corporation in the description of property column.  Enter the date you acquired the S corporation stock and the date of the repayment that caused the gain.

[PipPash]

Let's assume this is an open account debt, less than $25,000 and the gain should be reported as Ordinary Income.  From the research I have done, it looks like the ordinary gain would go on the 4797.  Would that be Part II?

[TaxPrep2019]

How or where do you enter this in Turbotax?

[JamesG1]

Report gain from loan repayments as follows:

• Click on the magnifying glass in the upper right hand corner of the screen. 
• Enter ‘4797, sale of business property’.
• Click on ‘jump to 4797 sale of business property’
• At the screen Any other property sales?, click on Sales of business or rental property that you haven't already reported.