@Anonymous_ I got the same OOB the first time looking at this, but I was using $25,000 in capital stock, but in rereading the facts, the amount is only $25.
A couple of questions:
- The balance sheet should be reported based on your books and records; not how the tax return presents the income and expenses. As a result, where are you reporting the $3,500 in gain?
- Who carries the loan?
- Is there interest expense being charged?
- If "yes" (which should be the answer), where is this being reflected?
- Paying down the loan will only impact RE for any interest expense component.
- How are you maintaining your books and records?
- Software package?
- If using some software, due to the nature of accounting, you will always need a balancing journal entry for the debits and credits. As a result, you should always be in balance.
- Don't understand the gain on the sale of shares. The facts make it sound as if you sold stock in your S corporation? Please expand on this transaction.
*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.
