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Due to cash flow issues, a shareholder (actually the President/Director/shareholder) made a short-term no-interest loan to the S-Corp early in the year in order that an outstanding gas tax bill could be paid. Within three months, the S-Corp repaid the shareholder after additional gas royalty revenues had been received. Does this even need to be entered and/or addressed in the tax return? If so, where are the entries made? Since it was nothing but a journal entry on the company books (money in from the loan proceeds and money out to repay the loan), was it even a tax-related item?
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If both ends of the transaction was in the tax year then it does not go on the return anywhere.
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If both ends of the transaction was in the tax year then it does not go on the return anywhere.
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How much was the loan?
Does Section 7872 apply?
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This is from Section 7872.
"(C)Corporation-shareholder loans
Any below-market loan directly or indirectly between a corporation and any shareholder of such corporation."
As @rbynaker said you should check out section 7872
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The loan was for $3,000. Loan was made in January 2024 and repaid by the S-Corp back to the shareholder within about 60 days.
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This is an S-corporation, not a C-corporation. Does that make a difference?
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I don't see this being a big deal. I don't think the rule applies to S Corps anyway. and the amount, even if it did would be immaterial..
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It does apply to s-corp's, but under $10000.00 Not to worry
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"not a C-corporation."
This is a 7872 subsection reference: (C)Corporation-shareholder loans
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