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- Distribution of Equipment to 100% Shareholder upon dissolution of the company
Distribution of Equipment to 100% Shareholder upon dissolution of the company
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jskouberdis
Level 4
04-19-2022
11:14 AM
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I would like to ask the community a question. If an S-Corp dissolves in 2021 and distributes equipment to the sole shareholder subject to a loan does the loan decrease the distribution to the shareholder. Here is my understanding of what happens.
FMV of Equipment at dissolution - 10,000
Outstanding Loan at dissolution - 3,000
Net Distribution - 7,000
Adjusted Basis of Property - 3,000
Gain to Company - 4,000
Basis of Property to Shareholder - 7,000
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Shareholder Sells in next year 10,000
Basis to Shareholder 7,000
Gain to Shareholder 3,000
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Also would any payments of interest on the loan in the hands of the shareholder be deductible as investment interest or would it just be personal interest at that point.
Let me know if assumptions are correct. Thank you ahead of time for looking at my question.
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