Loan money to business(s-corp) to get (payoff) of bank loan note 100k for example, then planning to sell business next year, what is best route to report it this year.

[James27]

loan money to business(s-corp) to get rid(payoff) of bank loan note 100k for example, then planning to sell business next year, what is best route to report it this year. should I convert mortgages to loan from shareholders in balance sheet of 1120s form? when i sell business, will i be double taxed as new income? or is there a better way to report it?

[TomYoung · Accepted solution]

I find this difficult to understand, but I guess you want to lend your own money to your S-Corp and that money will be used to pay off a mortgage on some property the S-Corp owns.

If that's the case then the balance sheet entry would be a reduction in "Mortgages, notes, bonds payable in less than 1 year" and/or "Mortgages, notes, bonds payable in 1 year or more" and an offsetting increase in "Loans from shareholders". 

If you then sell the S-Corp and the new owner or owners pay off the loan from shareholder that certainly would not be considered "income" to you.

Tom Young