Question
Insolvent SCorp final year - shareholder loan cancellation of debt
I have an insolvent SCorp that ceased operations at the end of 2025 but owes shareholder $60k. Shareholder has been using the loan for basis over the last few years to deduct the losses. How do I address this on the final return? Specifically:
1 - The cancellation of debt should not be taxable since the SCorp is insolvent. How do I enter it into Lacerte to show it as nontaxable?
2 - How will this impact the shareholder basis, and if so, how do I enter the impact into Lacerte?
I appreciate your help.
