topic I have a small C corp.Made shareholder loans to corp. Now have generated some income that can be used to pay back loans. How do I account for that transaction? in Business & farm

I have a small C corp.Made shareholder loans to corp. Now have generated some income that can be used to pay back loans. How do I account for that transaction?

chemely — Sat, 01 Jun 2019 02:08:25 GMT

Were the loans in excess of $10,000?

DexterS — Sat, 01 Jun 2019 02:08:27 GMT

Were the loans in excess of $10,000?

yes...$24,000

chemely — Sat, 01 Jun 2019 02:08:29 GMT

yes...$24,000

does the amount make a difference? Not sure where to put...

chemely — Sat, 01 Jun 2019 02:08:29 GMT

does the amount make a difference?
Not sure where to put the loan amount received or where to put the repayment

Loaning money to the corporation doesn't create income an...

DexterS — Sat, 01 Jun 2019 02:08:30 GMT

Loaning money to the corporation doesn't create income and paying it back doesn't create an expense. So, the "in and out" don't hit your tax return unless you're required to maintain a balance sheet (Schedule L).

The accounting entry is Debit Cash, Credit Shareholder Loan Payable. All on the balance sheet.

The size of the loan matters because over $10,000 the Corp. is required to pay the lender (you) interest at the Applicable Federal Rate (AFR). If you didn't actually pay the interest they call this "imputed interest". This is an expense to the Corp. and income to you.

If the interest is over $10 you are also required to file a 1099-INT