PPP and EIDL

[SCORP2]

I have put $100,000 towards a new office building for my LLC S-corp of my own money.

Technically part of the money is money I got PPP (forgiven) and EIDL loan when I was a sole proprietor.

In 2022 I became S-corp LLC and have the option to enter them on my business return, or I can keep them as personal and put that I used the same amount as capital contribution towards the office building I'm building. It seems that leaving them off and list it as capital contribution then I can pay myself back tax free within a couple of years? I don't see the benefit in listing them on my business?

[AliciaP1]

Both the PPP and EIDL are only payable to an eligible business.  You cannot report them as part of your personal return when you report your taxes as an S-Corp.  It's not a matter of being a benefit or a detriment, it's that you are required to report all your business transactions through your business tax return.  Also, while the EIDL funds can be used for anything within your business, you were required to attest that the PPP loan funds were used to cover payroll expenses during your reporting periods when you applied for forgiveness.  The process of reporting this on your business tax return confirms the treatment of the tax-free forgiveness (and therefore receipt of your PPP funds) to the IRS since the SBA filed the information with the IRS upon approving your forgiveness.

[SCORP2]

I got both under my personal SSN as sole proprietor, now I'm LLC S-corp so I'm deciding if I'm going to put it on or not. Seems like it could go either way and I'm doing my own taxes, I just wanted to know if there are pros and cons.

[AliciaP1]

No, it can't go either way.  Even though you filed with your SSN originally, the business run under that number has now changed to reporting as an S-Corp.  That is where the information has to be reported.  The only pro is to report it on your Form 1120-S and the only con is to not report it on your Form 1120-S.  Not filing correctly could cause delays in the processing of your returns with the IRS.

@SCORP2

[SCORP2]

Where exactly on the 1120s do I put the EIDL loan amount  please?

[AliciaP1]

You would enter your EIDL loan as a long-term liability on the balance sheet (Schedule L) of your return.  

@SCORP2