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A shareholder was repaid part of a loan made to the business. Does the amount repaid this year get put on the taxes for 2024?

Forum|Forum|1 year ago
December 31, 2024
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Best answer by pk12_2

@mgpatzwald assuming that the loan the shareholder made to the entity was with after tax dollar, the partial return is that -- ( return of part corpus ). Obviously if there was some additional payment / return as interest etc.. that portion is untaxed income and therefore is taxable income to the shareholder.

Does this make sense ?

P

pk12_2Answer

@mgpatzwald assuming that the loan the shareholder made to the entity was with after tax dollar, the partial return is that -- ( return of part corpus ). Obviously if there was some additional payment / return as interest etc.. that portion is untaxed income and therefore is taxable income to the shareholder.

Does this make sense ?

M

Mike9241

what type of corporation? if it was an S-corp and he used the basis in the loan to deduct losses, repayment will have tax consequences. in addition, he'll need to include form 7203 with his 1040.

in addition, regardless of the type of corporation if the loan had a below-market interest rate, code section 7872 may apply which would require that each year interest be imputed.