Hello,
I have inherited the accounting work for several companies that a friend has hired me to take a look at. This one question revolves around funds that he put into the company (s), all which are S-Corporations, with the exception of one which is a partnership, all within the state of Florida. All of the companies have been in business for several years, so this would not be initial PIC.
I found several transactions throughout the year where money was put into the company but at the end of the year instead of it being kept as a loan, the CPA requested it to be moved to APIC. Is there a tax benefit (personal or corporate) for posting funds going into the corporation as APIC instead of a loan?
I understand that the absence of loan documentation, etc. for a closely held corporation may have been the reasoning behind the request for the move, but if all documentation was as required, are there tax benefits for one over the other?
Thanks for any help!!
Lena
I have inherited the accounting work for several companies that a friend has hired me to take a look at. This one question revolves around funds that he put into the company (s), all which are S-Corporations, with the exception of one which is a partnership, all within the state of Florida. All of the companies have been in business for several years, so this would not be initial PIC.
I found several transactions throughout the year where money was put into the company but at the end of the year instead of it being kept as a loan, the CPA requested it to be moved to APIC. Is there a tax benefit (personal or corporate) for posting funds going into the corporation as APIC instead of a loan?
I understand that the absence of loan documentation, etc. for a closely held corporation may have been the reasoning behind the request for the move, but if all documentation was as required, are there tax benefits for one over the other?
Thanks for any help!!
Lena