loan from shareholder

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In 2021, I had an LLC taxed as a partnership where the members (2) loaned the LLC $1200 total. In 2022, I changed the LLC to be taxed as an S corporation. In 2022, the LLC/S corp borrowed another $1000 total from the shareholders & was able to reimburse the shareholders the $1200 loan at the end of 2022. How do I account for the $1200 loan that was reimbursed on the S corp tax? TurboTax only asks remaining loan amount by end of 2022 (which is $1000); it doesn't ask for information of loan being reimbursed or original loan at start of the year. TIA.

TurboTax Business Windows

MinhT1Answer

Alumni - Intuit

If I understand correctly, the loan balance was $1,200 at the end of 2021. During 2022, the $1,200 was repaid and a new loan of $1,000 was taken.

On the balance sheet, at the end of 2021, line 19a of schedule L will show $1,200 and at the end of 2022, the same line will show $1,000,

The balance sheet only reflect the balance of the loan at year end. It does not reflect the movements. Only your books of account will show the movements.

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MinhT1

Alumni - Intuit

The loan repayment does not affect the profit of the S-Corp and is not reported on the K-1s of shareholders either.

The loan is a liability of the S-Corp which is reported on the balance sheet of the S-Corp (Schedule L of form 1120S). If the S-Corp is not required to include the balance sheet, then you will not see it at all.

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tle0880Author

Level 2

Thank you for your reply, @MinhT1.

I understand that the loan from the shareholder does not affect the profit of the S corp. However, I think your statement that the loan is not reported on the K1 is incorrect as I see TurboTax listing the $500 loan on each shareholder's K1 as "Loans from shareholder. . .End of tax year" on our K1. There is no amount in "Beginning of Tax year" which is what I'm trying to fill out.

I understand that I don't have to fill out the balance sheet but, from all of my reviews, it has been recommended by tax attorneys & other CPA's to fill it out so I've been doing that for my LLC tax return. Where, in Schedule L, would I account for the $1200 that was loaned by the shareholder/members in 2021 & reimbursed to the same shareholders/members in 2022? Since I did account for the loan in my 2021 1065 tax return which does show "$600 nonrecourse loan from shareholder at end of tax year," I want to make sure that the amount is accounted for in my 1120S return so that the IRS doesn't wonder what happened to the loan. Thank you.

MinhT1Answer

Alumni - Intuit

If I understand correctly, the loan balance was $1,200 at the end of 2021. During 2022, the $1,200 was repaid and a new loan of $1,000 was taken.

On the balance sheet, at the end of 2021, line 19a of schedule L will show $1,200 and at the end of 2022, the same line will show $1,000,

The balance sheet only reflect the balance of the loan at year end. It does not reflect the movements. Only your books of account will show the movements.

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