Hi All,

Trying to wrap my head around recalculating shareholder basis. Currently have a client that has a gain on repayment of a shareholder loan, and trying to understand what I am missing when I am reconciling their basis with the balance sheet. Here is the scenario:

Cap Stock: 7,000

APIC: 2,755

RE: (135,631)

Loan From SH: 127,928

This leads me to believe they should have 2,052 in debt basis at YE. Lacerte is calculating 3,422, since they had a loan repayment of 1,455 for the year, but only 85 was basis of loans repaid, and 1,370 was considered gain on repayment. Does the gain on repayment add to the debt basis? What am I missing?