Failed S- Corp

[Bjorn]

A taxpayer dumped money into his s-corp and the business failed.

We have a loss on the front of the 1065. We have plenty of basis because he dumped lots of money in.

Do we get any other deductions besides the front of the 1065 if basis is left?

They "loaned" the s-corp 10 grand. Would this fly as a business bad debt or a non business bad debt. What can I do for these people?


Mahalo

[sea-tax]

A taxpayer dumped money into his s-corp and the business failed.

We have a loss on the front of the 1065. We have plenty of basis because he dumped lots of money in.

Do we get any other deductions besides the front of the 1065 if basis is left?

They "loaned" the s-corp 10 grand. Would this fly as a business bad debt or a non business bad debt. What can I do for these people?


Mahalo

First off Bjorn a S-corp files a form 1120-s not a 1065. So you may want to transfer the data to your 1120-s module of your program. Once you have done that then we can proceed.
I understand seriously my mind has been going this tax season as well , don't worry it will get better soon. hang in there

[OldJack]

One should question if one should prepare a tax return if one has little or no experience with preparing that type tax return. Its not worth the cost of an error.

[Taxref]

The FMV of assets received in liquidation minus stock basis is a capital gain or loss for your client. Amounts loaned to the corporation are included in his basis.

[Bjorn]

S-Corp

Yes. I do need some sleep. Sorry about the 1065 instead of 1120-S.

Many thanks to the person who took the time to answer the question I intended to answer, but did not state very well.

Mahalo.

Bjorn.

[OldJack]

The FMV of assets received in liquidation minus stock basis is a capital gain or loss for your client. Amounts loaned to the corporation are included in his basis.

Shareholder loans never increase stock basis. Shareholder loans only allow deduction of operating losses in excess of stock basis. If a shareholder loan is not paid in liquidation it is a business bad debt.

[dsi]

Shareholder loans never increase stock basis..

SH loans do increase debt basis.