In technical terms, if you loan amounts over years that do not have separate formal terms, you are considered to be increasing the same loan amount each year. Another way to think of it is:
- Customers with Open Account Balances do not create new accounts each time they make a purchase - their Open Balance just increases
- You are considering the loan an Open Account Debt - so each year's loan should just be added to the Open Account Debt and you only have 1 account for the debt
Per the rest of the IRS instructions you quoted:
You must complete this section if you have personally loaned money to the corporation.
You must account for each formal note (notes with a written instrument) made to your S corporation by entering it separately in its own column. You can’t aggregate multiple loans into a single column. If you have more than three loans, use additional copies of Part II.
Loans made to the S corporation that aren’t evidenced by a written instrument are referred to as an open account debt and aren’t separately tracked. If an open account debt has a year-end balance of more than $25,000, it will be classified as a formal note at the beginning of the next tax year and must be separately tracked.
@rachetech
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