Final Year Tax return

[TAX]

I am doing final return for a client - Scorp: Business ended in 2011 (December)

Info:

After all adjustments, only three items on Balance sheet for 2011

Loan from share holder: $88,000
Retained Earning: ($20,529)
Net Income (2011): ($67,527.18)

Questions:

(1) What should I do on pro series tax software. Transfer Loan to RE or leave as it is.

(2) Can I deduct this loan on personal return as money lost?

Thanks!

[BHoffman]

I am doing final return for a client - Scorp: Business ended in 2011 (December)

Info:

After all adjustments, only three items on Balance sheet for 2011

Loan from share holder: $88,000
Retained Earning: ($20,529)
Net Income (2011): ($67,527.18)

Questions:

(1) What should I do on pro series tax software. Transfer Loan to RE or leave as it is.

(2) Can I deduct this loan on personal return as money lost?

Thanks!

Looks like the balance sheet is off by $56.

If I'm reading this correctly, didn't the client already "deduct" the $88k by using his debt basis to take the losses? Perhaps recharacterizing the loan to Paid-in Capital - which is pretty much like closing it to Retained Earnings - will solve your problem and zero out the balance sheet (except for that pesky $56).

I don't use Pro Series, so can't help you with that. Giving you a bump.

[TAX]

Looks like the balance sheet is off by $56.

If I'm reading this correctly, didn't the client already "deduct" the $88k by using his debt basis to take the losses? Perhaps recharacterizing the loan to Paid-in Capital - which is pretty much like closing it to Retained Earnings - will solve your problem and zero out the balance sheet (except for that pesky $56).

I don't use Pro Series, so can't help you with that. Giving you a bump.

Thank you! I did transfer to paid in capital.