My husband started a taxable S-Corp in 2016 (real estate fix & flip) and has had a professional CPA firm prepare his taxes in 2016 & 2017. Now that we are married, I am taking over the bookkeeping and preparing the business and personal tax returns.
Since the start of the business my husband has had to contribute additional funds to the business. The CPA firm classified some the the contribution as loan from shareholder and some to capital contribution. I do not know how they determined how much to apply to each account.
Is there a tax rule that determines whether or not a contribution is shareholder loan vs capital contribution?
