C corporation Loan from Shareholder on Disolution

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  • equinecpa
    Senior Member
    • Mar 2006
    • 578
    #1

    C corporation Loan from Shareholder on Disolution

    Single shareholder C corporation contemplating dissolving. Corporation has NOL which I presume will be lost on dissolving. The NOL was funded by Shareholder contributions (loan from shareholder). When C corp dissolves is this a business loss or capital loss to the shareholder?
    Last edited by equinecpa; 03-26-2018, 03:55 PM.
    Tags: None
    • geekgirldany
      Senior Member
      • Jul 2005
      • 2359
      #2
      In my opinion it would be a capital loss as the contributions is the shareholder basis in the stock. I do not think it would qualify for Sec 1244 treatment.
      Claiming Ordinary Losses for Sec. 1244 Stock
      https://www.thetaxadviser.com/issues/2009/mar/claimingordinarylossesforsec1244stock.html
      Sec. 1244 encourages new investment in small business by permitting investors to claim an ordinary (rather than a capital) loss on the disposition (including worthlessness) of qualifying small business stock.


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