Schedule C, where to put proceeds from a loan to a company?

Forum|Forum|4 years ago
March 18, 2022
2 replies
20 views

A client borrowed money from a bank to help the business. Where do I show those bank proceeds on his schedule C, or where do I show the proceeds?

ProSeries Basic

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J

jeffmcpa2010

Level 10

<sacarsm font on>Dig out an old "Introduction to accounting" text book and read the chapter on reporting loans as income.....<sacarsm font off>

qbteachmt

Level 15

Two issues:

You cannot loan to or borrow from yourself, for a Sched C entity, because you and that entity are the same. There is nothing to report, except if the loan proceeds are used for a business reportable activity, then the interest might qualify for business expense.

No one reports loan proceeds as other than being in debt. Don't confuse Banking and Income as if they are synonyms.

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IRonMaN

Level 15

"No one reports loan proceeds as other than being in debt"

But unfortunately a lot of people try since this is far from the first time this question has been asked. 🤔 🤔

Slava Ukraini!

qbteachmt

Level 15

"But unfortunately a lot of people try"

I've always found that odd; as I teach in my class: "Do you really want to report the money you loaned to your business as income and pay taxes on it?"

When you put it like that, it usually helps them see the flaw.

Don't yell at us; we're volunteers

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