There were loans made over the years from a C Corporation shareholder. One of these loans was not really a loan at all. The shareholder now wants to reclassify the "loan," which is around $50,000, as equity. The company has around $100,000 in total assets. The company has enough losses from line 1 and line 2 of its Schedule M-2 to result in a loss for its retained earnings at the end of the tax year. Will showing this "loan" now as equity on line 3 of Schedule M-2 likely raise a red flag with the IRS? Will there be any tax owed due to the reclassification despite showing a loss for Schedule L line 25 at the end of the tax year?