Create basis to claim losses

[Intuit Tax Advisor Team]

Creating loans between commonly owned S Corporations, where the loan funds are retained by the receiving S Corporation may create debt basis. The shareholders may be able to use such basis to deduct passthrough losses on their individual income tax returns. Taxpayers should avoid circular transactions.

[ataxshelter3704]

This is a great idea and clients are always arguing sweat equity and non-taxable guaranteed compensation payments. It would be great to have an infographic that straight forward - yes you can do these, no you cannot take a W2 as a name partner in a partnership