money put into S corp

[Bjorn]

Aloha,

When a sole share holder S-corp puts money into the S-Corps Bank account does that go on Schedule L Additional Paid in Capital or Can it go on line 3 of the schedule M2. My concern is if they later take it out will that trigger a tax other than the normal pass through of the profit on the s-corp.

Mahalo,

Bjorn

[BOB W]

Depending on the amount and purpose on the deposit, I usually treat it as a shareholder loan. This allows repayment at any time without tax consequences. Once it is in Capital or Additional Paid in Capital your choices are limited. I have in the past split a deposit into Capital and Loan to reflect its purpose.