S Corp tax question


L

linda

Can a loan to a business be a tax deduction on our personal
taxes?

Can a corporate loss be a carry over to the individual's
personal tax deductions?
 
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P

Paul Thomas, CPA

linda said:
Can a loan to a business be a tax deduction
on our personal taxes?
Nope. Loans made are assets, and until your company
defaults on the loana you made to it, you can't deduct that
amount.
Can a corporate loss be a carry over to the individual's
personal tax deductions?
Yes, if you have sufficient basis to deduct the losses.

Your questions lead one to believe that you would get some
significant benefit from seeking professional tax help from
a local CPA or EA.
 
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K

Katie

linda said:
Can a loan to a business be a tax deduction on our personal
taxes?

Can a corporate loss be a carry over to the individual's
personal tax deductions?
From the subject of your post, I presume these questions
relate to an S corporation.

No, a loan to the corporation is not a deduction on your
personal taxes. It is an asset to you and a liability to
the corporation. If you are a stockholder of the S
corporation, it increases your basis for purposes of
deducting your distributive share of the corporation's net
loss, if any.

If the corporation's operations result in a net loss, the
loss passes through to you (and the other stockholders, if
any) in proportion to your ownership percentage. It is
deductible on your personal return as long as it does not
exceed your basis in the corporation, which is increased by
your loans to it.

Katie in San Diego
 
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