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Protocol2000
April 4, 2022
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Capital Stock

  • April 4, 2022
  • 1 reply
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I am an SCorp., and I made a loan to the company to settle an old debt. Does this move affects my capital stock? I have a negative capital stock number on my balance sheet and therefore is out of balance. Please help. Thank you. Protocol

Best answer by Rustler

No, a loan to the company is a company liability and the company pays it back to you. It does not affect shareholder value at all in an s-corp.

 

Your capital stock should never go negative in an s-corp, doing so will make any future distributions taxable.

 

I suggest you get with a tax accountant to find out how to manage capital stock, and distributions. S-corp stock (ownership) is not handles the same as sole proprietor or partnership equity.

1 reply

Rustler
RustlerAnswer
April 7, 2022

No, a loan to the company is a company liability and the company pays it back to you. It does not affect shareholder value at all in an s-corp.

 

Your capital stock should never go negative in an s-corp, doing so will make any future distributions taxable.

 

I suggest you get with a tax accountant to find out how to manage capital stock, and distributions. S-corp stock (ownership) is not handles the same as sole proprietor or partnership equity.

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