How to write off a loan loss from a S Corp closed in 2018, in the owners 1040?

[George4Tacks · Accepted solution]

"owners 1040" Loan? What is the clients basis the in the S-Corp? This might taste like a Schedule D stock loss, but my taste buds are shot this close to the deadline. 

[vgolivas]

Hey George, I hope you are Psychic today. S corp was an accrual basis. Can it be claimed as a legit loan (that was the purpose) but the company closed and he couldn't get it back. Investment?

[vgolivas]

Basis $3100

[George4Tacks]

The 1040 person is a cash basis taxpayer. My psychic abilities see nothing add with the accrual basis of the corp, unless the loan was some stinky accrual of wages earned or other such distasteful things. The 1040 person is the "owner". The 1040 person should have a basis in the shares and possibly an exposure for debts owed by the corporation. 

Unless the person is in the business of loaning money, it is a nonbusiness bad debt OR it is an investment loss of the basis of the worthless shares. You are the one being paid to do the return. You are the one signing the tax return. You have to find out what tastes right to you. 

[vgolivas]

Great, good way to put it. I like fun, even in the most stressful moments. Thanks for taking your time.