I agree this is not deductible.
- First there is conflicting "accounting" for this $1,000.
- You indicate that there is documentation that this is a "loan"
- However, you have not recorded this as a loan on your books and records. You indicate that this was recorded as a capital contribution (capital stock)
- If you were ever audited, I believe the IRS would look at all the supporting facts and come to the conclusion that is was in fact a capital contribution.
- Since this is a capital contribution, as noted by @Mike9241 you should have been tracking your tax basis in the S corporation. This capital contribution would have increased your tax basis and you would have used this basis to take ordinary losses being passed out by the S corporation.
- There are not sufficient details to understand much more than that. There are no details as to what your tax basis was when you closed the S corporation. This is key to understanding if you in fact had any tax basis left to claim a capital loss or whether it was at zero and no further deductions were available.
- Additionally, were there any assets distributed out to you when the S corporation was liquidated?
- Depending on the assets distributed, there could have been gain on the liquidating distribution
- Too many unknown facts to provide help in this area
- My final recommendation would be to spend maybe a couple of hundred bucks to visit a tax professional, provide them with the final return and facts, and they should be able to determine if there were any additional losses available upon liquidation or whether you need to amend any returns.
*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.
