Personally invested monies

[Maribeth-Martin]

When A TP Purchased a C-Corp, he invested into the company his own monies through the years. Now that he is thinking of selling the C-Corp, he wants to get his personal invested money back out of the company that is not a part of the sale. How do I handle this transaction? Technically, through the years he "loaned" his personal money to the C-Corp, now he is thinking of selling the C-Corp someday down the road, so he wants to get his money back. Can this be done?  

[sjrcpa]

Before closing, the corporation repays the loan.

[IRonMaN]

"Technically, through the years he "loaned" his personal money to the C-Corp"

What to you mean by "technically".  Is the money showing up as a loan or did it get coded as equity?

[Maribeth-Martin]

Yes I believe it did

[sjrcpa]

It did which?

[Maribeth-Martin]

the bookkeeper put the money in the equity account in QB.

[IRonMaN]

Then he didn't "loan" the money.  He invested the money and he will get it back once he sells the business - the money is part of his basis in the corporation's stock.

[Maribeth-Martin]

Do I handle it that way even though it was a mistake which was caught when I was asked ti prep the books for sale?

[IRonMaN]

Are there signed loan agreements indicating that the money was loaned to the business?

[Maribeth-Martin]

No sir, this is a very small corp. when the money was needed, he would just transfer into the bank account.

[IRonMaN]

If it was reported as equity on prior tax returns and there aren't any documents indicating that they were loans, I think he is stuck with equity.