Are expenses credited to Shareholder Account deductible-cash basis

[equinecpa]

Have client who owns 100% S Corp has home office...did not have accountable plan, is implementing one now.

1. Is it too late to claim 2006 expenses? Corp is on cash basis. Obviously check was not written to reimburse, I was wondering if a charge to shareholders loan would be considered reimbursement?

2. Client deducted fuel in error - I will back this out and call it a draw. However would like to record a mileage deduction in the corporation -again offset to shareholders account. Would this be deductible in 2006?

I guess what I'm really questioning is: Are credits to shareholders account considered payment or do checks need to be exchanged?

Thanks all

Carolyn

[OldJack]

Cash basis accounting does not mean there has to be a check written from a bank account although that is the preferred method.

Obviously there could be an argument about payments by way of shareholder loans, but I have always considered them as paid and deduct the same especially if they are insignificant in amounts (de minimis) to the overall business operation.

An "accountable plan" does not have to be a specific written plan document in order to reimburse employees for legal business deductible expenses if the employee meets the requirements (documented proof such as receipts, who, what, where, when, and why).