Loans from Shareholders : $1600
Retained earnings : -$1600
Total assets : 0.
Total liabilities, capital & retained earnings : 0.
Thanks,Just show the $1,600 as a capital contribution. Not a loan as you won't be repaid.
I assume that you are a cash method taxpayer, so there is some exposure to claiming the amount paid in 2018 on the 2017 tax return. I would not lose sleep over this and claim it in 2017 knowing that there is some exposure.
As a shareholder in an S corporation, you should be maintaining a basis schedule. Once this is updated for your final K-1, you can now determine your overall gain or loss on this investment.
Just show the $1,600 as a capital contribution. Not a loan as you won't be repaid.
I assume that you are a cash method taxpayer, so there is some exposure to claiming the amount paid in 2018 on the 2017 tax return. I would not lose sleep over this and claim it in 2017 knowing that there is some exposure.
As a shareholder in an S corporation, you should be maintaining a basis schedule. Once this is updated for your final K-1, you can now determine your overall gain or loss on this investment.
Thanks Rick for your advice. Where do Capital contribution fall under ? It would not be under Liability right? There is a section in the balance sheet page called 'Capital and Retained earning'. with 3 options a) Capital Stock ...$...... b)Additional Paid in Capital ...$... c)Adjustments to shareholder equity ...$.... Would this Capital contribution fall under any of these groups ? Since I am 100% share holder (100 shares), I wouldn't any more equity with this capital contribution. Would this still apply for me ? Also, are you suggesting that I claim both 2017 & 2018 excise tax payments in this current filing , when you say do not lose sleep over it..(yes, I am a cash method taxpayer).Thanks again in advance..
Responses to your questions:
1) You can show it as additional paid in capital
2) Not sure I understand the next question. Would what apply to you?
3) Yes claim both 2017 and 2018 on your final tax return.
Thanks again Rick. 2)Since I am 100% share holder in my s-corp(100 shares). Since, I wouldn't add any more equity with this capital contribution. Would this(Capital contribution - Additional Paid in Capital -The amounts paid for stock in excess of its par value . This include other amounts paid by stockholders and charged to equity accounts other than capital stock. ) still apply for me ?
Yes. You did add additional equity, you paid the bills of the S corporation. Since you technically can't do this from personal funds, the transaction is that you contributed the $$ to the S corporation and then the S corporation paid the bills and is then entitled to the expense at the S corporation level.