S-corp final return

[Catherine]

Have an S-corp that folded, still owing a few pretty pennies to the shareholders. How do I deal with those? Too tired to think right now.

Thanks all, and I think it's time to go to sleep. Snow overnight so I'll have to shovel before the first client shows up at 8:30. And if I get shoveled out that client will, of course, cancel.

Catherine

[OldJack]

How would you file the return if it was not a shareholder loan. If the S-corp cannot pay the loan it just stays on the final return as a liability. The shareholder then has a loss to deduct on his 1040.

[Catherine]

But how do I report this? There's no clear place for it on the K-1 -- Line 8a as a long-term loss so it can go to the personal Sch D as a business loss? Or does it not go through the K-1 at all? In which case, where and how is it reported?

[Maribeth]

The loss is not at the corporate level, it is at the shareholder level. The shareholder had $XXX due to him from the corporation. The shareholder also had $XXX invested in the corportation. The capital loss is then determined and taken on the shareholder's return.

Maribeth

[Catherine]

The loss is not at the corporate level, it is at the shareholder level. The shareholder had $XXX due to him from the corporation. The shareholder also had $XXX invested in the corportation. The capital loss is then determined and taken on the shareholder's return.

Maribeth

So there is no specific documentation due to the shareholders from the corporation?

[Maribeth]

So there is no specific documentation due to the shareholders from the corporation?

There is no form or document that I am aware of that the corporation has to submit to the shareholder. I would surmise that the shareholder is already aware that they have a loss.

Maribeth

[imjulier]

K-1 basis tab should document this if you've been keeping up the basis calculation year-to-year. It doesn't have to be provided to the SH but I'd keep it in order to document the Sch D loss. Otherwise, I would agree with maribeth that its an off-the-record calculation and just keep notes on why you did what you did.

Julie