Below is information about HOW ARE OFFICER LOANS TREATED WHEN A CORPORATION DISSOLVES from a variety of sources. Please take a look at the materials that our team has selected for you.
https://taxes.uslegal.com/articles/irs-treatment-of-loans-to-officershareholder/
The court outlined certain conditions beneficial for the taxpayer to demonstrate in order for the funds to be treated as a loan, including (1) the existence of corporate records indicating that the corporation itself considered the transfer to be a loan; (2) tax returns filed by the corporation indicating amounts due on loans to shareholders.
https://yourbusiness.azcentral.com/can-claim-unpaid-shareholder-loans-s-corp-dissolves-27485.html
Unpaid Debts If you loaned the company, say, $35,000 over 10 years and only get $20,000 back, you may be able to write off the remaining $15,000 as …
https://www.debt-rr.com/2020/01/24/company-dissolved-debts/
Businesses incur tax obligations until they formally file to dissolve the company with their local, state, and federal governments. When business file, creditors are notified that the company is dissolved so no other credit is extended. This also ends any …
https://www.accountingweb.com/tax/individuals/dealing-with-shareholders-losses-on-loans-to-their-companies
It might take years for her to deduct the entire amount. For the year the loan proves to be uncollectible, the law allows her to use the loss to offset any capital gains and then use as much as $3,000 of the remaining loss as an offset again ordinary income from, for instance, her wages or other kinds of compensation.
https://www.justanswer.com/tax/938pi-corporation-needs-dissolved-loan.html
A recent Tax Court decision (Ramig, CA-9) dated October 29, 2012 held that a corporate shareholder was not entitled to bad-debt deductions for amounts he advanced to, and paid on behalf of, the corporation because they represented equity investments, rather than loans. The corporation could not obtain loans from outside lenders, and it was not ...
https://jmtaxlaw.com/loans-to-s-corporation-shareholder/
If a loan is not being treated as a loan (documented, repayment with interest etc.) the loan can be reclassified as a distribution to the shareholder. If the shareholder does not have enough tax basis in their stock, taxable gain will result when the loan is reclassified as a distribution.
https://www.nolo.com/legal-encyclopedia/free-books/small-business-book/chapter12-14.html
If there is a possibility that a creditor may bring a claim after the company is dissolved, you and the other owners should set aside a contingency fund to pay any liabilities (or taxes) that surface after the dissolution, rather than distributing the assets to yourselves.
https://www.upcounsel.com/loans-from-shareholders-s-corp
An S corporation can pass business losses through the business to its shareholders, which they can then deduct based on the adjusted loan and stock basis. If a loss is passed through to the shareholder exceeds their basis of stock, any amount in excess will reduce the loan basis. However, this number cannot drop below zero.
https://www.thetaxadviser.com/issues/2008/oct/scorporationshareholderloansacautionarytale.html
Full or partial cash repayment of the debt by the corporation reduces the shareholder's loan basis. (Repayment with property other than cash is beyond the scope of this item.) If the debt basis has previously been reduced to zero, all the subsequent repayment is treated as …
https://www.askspaulding.com/blog/shareholder-loan-compliance-issues/
As you will see below, a shareholder cannot simply “say” something was a loan. They actually need to treat it as one. 2. Took distributions out of the S-Corp that exceed the shareholder’s basis This issue usually arises after a few years of inadequate accounting (usually because the client does not have an accountant).
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