Discussion:Form 1120S

From TaxAlmanac, A Free Online Resource for Tax Professionals
Note: You are using this website at your own risk, subject to our Disclaimer and Website Use and Contribution Terms.

From TaxAlmanac

Jump to: navigation, search

Discussion Forum Index --> Accounting Questions --> Form 1120S

AccTaxMan (talk|edits) said:

9 April 2013
Please correct me if I am wrong. If the shareholder of a S-corp needs to put money into the S-corp, the S-corp should issue more stocks for him to buy so the proceeds can be injected into the S-corp. What about if this shareholder just deposited money into the S-corp bank account to pay the S-corp expenses without going through the proper process? In this case, where should his "additional contribution" go on the balance sheet of the S-corp?

Kevinh5 (talk|edits) said:

9 April 2013
you might be wrong or you might be right, this could be additional paid-in-capital or it might be a loan to the company.

Podolin (talk|edits) said:

9 April 2013
Important to know whether this is an S corp. with only one shareholder. If so, it is not necessary to issue additional stock. It can just be additional paid-in capital. Or, as K5 says, it can be a loan, but why bother with a loan if there is just one shareholder?

AccTaxMan (talk|edits) said:

9 April 2013
There are two shareholders. So does that mean the "additional paid-in-capital" option is out of the window?

Podolin (talk|edits) said:

9 April 2013
Whoa! Make it a loan from s/h and formalize it. Or, if it is their intention, have the corp. issue more shares to the s/h who put in more money.

Mr cheese (talk|edits) said:

5 May 2013
This questions is not hard to answer:

1. If the shareholder intends to be paid back, then it's obviously a loan. Technically, a note indicating a rate of interest and the term of the loan should be prepared and issued to the debtor (S corp)....but then, do taxpayer's ever follow burdensome formalities?

2. If the shareholder does not intend to be paid back, nor can a principal amount be determined, then it's common stock, but only if a stock certificate indicating the number of shares issued is provided to the shareholder.

3. If the shareholder does not intend to be paid back, nor can a principal amount be determined, then it's not a loan. However, if no stock certificate is issued, then it's additional paid-in capital.

These three general rules should help you to determine the economic effect of a transaction when the taxpayer acts as if no separation exists between themselves and that of their corporation.

To join in on this discussion, you must first log in.
Personal tools