[taxchat] interest on a loan to S Corp by the shareholders

29 September 2008

[taxchat] interest on a loan to S Corp by the shareholders

I put this question up awhile ago, and Debbie B being the wonderful person that she is responded with the below.

“interest on loan to S Corp

An S-Corp cannot deduct accrued interest owed to a cash basis shareholder. You can record the interest on the S-Corp books, but make an M-1 adjustment on the S-Corp tax return since it cannot be deducted until paid.

Debbie B”

The preparer doing their individual return wants to know why I am not deducting the amount on their return. She does not think the ABOVE statement is correct. I would also like to point out that she is the person that did the corp return the prior year and didn’t include any interest calculation!

I am going to start trying to find this written somewhere; however, I thought if anyone knew they could give me some directions to narrow done by research.

Thanks for the help,

Cris

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Pajak

29 September 2008

[taxchat] interest on a loan to S Corp by the shareholders

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