I have a small C corp business purchased years ago and I am the sole shareholder. I should have created a loan to shareholder as I used business funds to payoff the previous owner. I created it this year well after the purchase and am able to payoff the loan in a single transfer from my personal bank account to my business bank account all within one fiscal year. After waiting 61 days, I want to return part of the payoff by issuing a lump sum stock dividend, reporting it via 1099. The rest of the payoff would need to be a return of capital. Is the return of capital reported on a certain 1099? Does this lump sum payoff create IRS and bank red flags if accomplished within one fiscal year?
