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Protocol2000
Level 3

Capital Stock

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

Solved
Best answer April 07, 2022

Best Answers
Rustler
Level 15

Capital Stock

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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1 Comment 1
Rustler
Level 15

Capital Stock

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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