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Christine384
Level 3
March 12, 2020

S corp and loan liability when bus closes

  • March 12, 2020
  • 2 replies
  • 17 views

When a business closes but shareholder still owes bank for business loan, can interest on this loan be taken personally?   what about principal? 

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    2 replies

    qbteachmt
    qbteachmt
    Level 15
    March 12, 2020

    What about the principal: Principal repayment is never part of tax reporting. It is debt service.

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    C
    Christine384Author
    Level 3
    March 12, 2020

    I should have asked if there is any at risk loss on principal.

     

    rbynaker
    rbynaker
    Level 13
    March 13, 2020

    Making a principal payment on behalf of the S-Corp will increase the shareholder's basis in the S-Corp which, in turn, might free up some losses previously suspended due to lack of basis.

      qbteachmt
      qbteachmt
      Level 15
      March 13, 2020

      We don't know if there are multiple shareholders, and if the business closed, is the S Corp being terminated? That means assets and liabilities are being assumed by someone or what is happening?

      Don't yell at us; we're volunteers
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