We have PUE, what about SUE?

[Corduroy Frog]

Certain conditions can give rise to a deduction for Partners' Unreimbursed Expenses which do not appear on a K-1P.  What about the same counterpart for unreimbursed expenses for a shareholder in an S Corp?  in other words, "SUE" ?  Is this allowed?

[jklcpa]

1 hour ago, Corduroy Frog said:

Is this allowed?

No. It is different for a corporation and not at all the same as how a partner handles UPE.

Corporation would need to set up an accountable plan and reimburse the shareholder. An example of where this is used is personal auto used for business purpose, shareholder keeps mileage log and submits a report to the corp for reimbursement. Corp reimburses at the allowed federal rate.

There are other accountable plans that have more specific tax law rules such as medical reimbursement plans or when to reimburse shareholder paid disability insurance premiums.

If there is carelessness or intentional comingling of expenses paid from the corp accounts, you may want to have a discussion with your client about not using the corp's checkbook as his/her own.

[Corduroy Frog]

Thank you.  There are differences between S Corps and Partnerships, and I guess this is one of them.  Even with a partnership, all the elements mentioned in your post should be observed.  Thank you for your knowledge and expertise.