If a Corporation issues a distribution to its shareholder in excess of his/her stock basis, is it taxable even if he/she has loaned the company,so together including the loan there is still basis?
Hal Martin, CPA firstname.lastname@example.org 440 Mamaroneck Avenue
Suite 508 Harrison, NY 10528 Phone: (914) 636-7200 Fax: (914) 636-7705
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So, I have a taxable income problem....If shareholder distributes, in the current year and it's charged to AAA Distributions, in excess of his stock basis, it's taxable. Despite the fact he loaned a billion dollars into the S-corp?
If the corp is an S corp. from inception – then you first look at Stock basis and when that is 0 you next reduce loan basis. The excess is taxable. If it has C corp. E&P it is more complicated. There are 4 steps.
Very truly yours,
ROBERT S. BARNETT
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