1120 S Loans from shareholder and others

[erchess]

Where do loans from shareholder and from others get reported on an 1120S? Can the shareholder claim a current deduction for these loans? If not, can we amend the payroll report to reduce the owner's pay? The loans were made by not cashing paychecks which in turn were still reported as wages. (I had nothing to do with the payroll.)

[Lion]

Balance Sheet

On Schedule L, the Balance Sheet, Line 19 Loans from shareholders, and other appropriate lines for loans from others. Loans are not an expense and do not go on the P&L; although, interest paid on loans is an expense.

[erchess]

TY Lion

OK so loans go on the balance sheet I'm sure I can figure that out but what about the possibility of re doing payroll to reflect uncashed paychecks instead of reporting them as loans? Would that be better or worse or no difference?

[Lion]

Better or worse for what, or for who? Does he intend to cash his pay checks ever? How much will it cost to have 2011 payroll reports corrected? Are you trying to increase his deductions or decrease them? Do you have time now?!

[BHoffman]

Hi erchess - depending on a few things, perhaps the paychecks could be voided in the current year 2012 if it has been recently decided (in 2012) that they will never be cashed.

If the payees do intend to cash the checks eventually, then there is no loan. These checks are just uncleared.

If the paychecks are voided in 2011, I still don't see any loan but there might be some payroll payable and there are rules about deducting that even if reporting on the accrual basis.

Good luck.

[Gretel]

Hi erchess - depending on a few things, perhaps the paychecks could be voided in the current year 2012 if it has been recently decided (in 2012) that they will never be cashed.

If the payees do intend to cash the checks eventually, then there is no loan. These checks are just uncleared.

Good luck.

Yes, I agree. There could be a problem if the bank balance is negative at YE though.

[ChEAr$]

I'm late here to the subject, but he DID receive pay that was due, and if he has not cashed the pay checks, the net amounts are still due him.

So the adjusting entry in the general journal will be debit accrued pay and credit stockholder loans. Let's dont' worry about interest (unless the total is more than 10 grand). The corporation still owes him and he should collect.