Gifting of S Corp Stock and Reduced Basis Loans

[jskouberdis]

I have a situation that I believe I know the answer to but would like to throw it out to the community to get their opinion also.  I have a situation where a son owns 49% of the stock of an S-Corp and the mother owns 51% of the stock.  The mother is getting older and does not participate in the business any more.  She would like to gift the stock to her daughter in law.  The mother's basis in the stock at 1-1-21 is zero.  She also has a loan payable to her of $78,000.  The basis of the loan is $24,000 because she has taken S Corp losses against the loans since her stock basis is zero.  Since the mother is giving the stock to her daughter the basis in the daughter's hands will be zero since that is what the mother's was and this is a gift.  The loan to the mother will be paid off in 2021.  There was a loan document drawn up.  Based on my reading the mother will have a long term capital gain of $54,000 since the basis in the loan is $24,000.  If no loan document was drawn up then the gain would be ordinary.  Is my thinking correct?  What do all of the experts in the community think of my conclusion.