"ToddH" <toddmhutchinson[at]gmail.com> wrote in message
news:0375ddaf-c47a-4285-bf44-8fae50636339[at]m34g2000hsc.googlegroups.com...
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Any date after the last interest payment date. You can get fancy and you and
your wife can actually make a capital contribution and take the money back
as repayment of the note, but the effect is the same as a journal entry.


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Please delete all unnecessary text from the prior post when responding.

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Can I still reclassify this note as contributed capital even though we
have been taking interest income? If so, what date should the journal
entry be made?

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Mar 23, 11:26*am, "Haskel LaPort" <QBFan...[at]gmail.com> wrote:
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stockholder on the books - interest was paid - and wants to know how
to close out the account. Haskel responded . . .
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This is why I so HATE loans to stocholders for pass through entities.
It is much simpler and easier to run the money through contributed
capital, add it to basis and treat payments as distributions. Its
also almost always cheaper for taxes too.

The problem I have with Haskel's response is that we may be
reclassifying AFTER-THE-FACT to get a better tax treatment than we're
entitled to. While I would LIKE to follow Haskel's plan - and with
some forethought I would have structrued it this was from the
beginning - with the taxpayer setting up the way he did, this
reclassification could result in a Section 1244 treatment for any
remaining basis that is lost and this may not be appropriate under the
circumstances.

In caes like this we have to look not only to the note but to the
REASON for the loan to begin with - why did the stockholder loan the
company money? Did they fall on hard times or was the corporation too
thinly capitalized to begin with? The answers to these questions -
and a few more - will determine the correct treatment of the
liquidation.

My recommendation is that you get professional help with a local tax
pro and SOON. I also assume that since the business return was due on
March 17 that you've filed the appropriate extensions with both
Federal and state agencies.

Good luck,
Gene E. Utterback, EA, RFC, ABA

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

"ToddH" <toddmhutchinson[at]gmail.com> wrote in message
news:231487b0-87fd-4b9c-a66c-caab51e6edc5[at]s37g2000prg.googlegroups.com...
- quote -

Assuming you and your wife get along, I would make a journal entry on the
books to reclassify the shareholder note Contributed Capital. No reporting
is required on the K-1.



- quote -

Please delete all unnecessary material from the prior message when
responding.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Mar 18, 10:53*am, "Haskel LaPort" <QBFan...[at]gmail.com> wrote:
- quote -


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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

"ToddH" <toddmhutchinson[at]gmail.com> wrote in message
news:e707981d-96f9-4ac5-a7a2-74e6d01b75cd[at]e6g2000prf.googlegroups.com...
- quote -

How many shareholders in the S-Corp?



- quote -

Please delete all unnecessary material from the prior post when responding.

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

After the sale of all assets in an S-Corp liquidation, the only thing
remaining on the balance sheet is a balance in long-term note payable
to shareholder. Interest was paid to the shareholder regularly.

1) Is the note balance treated as a negative distribution to Retained
Earnings to close the books? What is the treatment on the 1020S tax
return?
2) Is this reported on the K-1? If so, where?

Thank you for your help!

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >