Loan to shareholder - Amended return

Technical topics regarding tax preparation.
#1
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I know this topic has been beaten to death, but I thought I would add a new twist.

I'm amending a 2018 1120S. The sole shareholder took distributions but categorized them as subcontractor expenses. The amended return will have additional income and additional distributions.

Now I see that, in addition to the ordinary income, the shareholder will also have sizeable distributions in excess of basis.

I know many on this forum are "pro- loan to shareholder". I tend to be more conservative with the loan approach and advise clients to formalize the loan with a basic written agreement.

How would you folks handle this situation on an amended return? I can e-file the 2018 and 2019 1120S.
 

#2
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Do subsequent years provide for the "repayment" of this receivable through additional income?
If so, I'd be comfortable pushing that through.

If it doesn't, I'd discuss with my client how to treat it and paper it accordingly or leave it as excess in 2018.
~Captcook
 

#3
JR1  
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LOL...well....."pro- loan to shareholder"

There's nothing aggressive about that as long as there's good reason to believe that it will be repaid either in real money or in profits distributed against it.
Go Blackhawks! Go Pack Go!
Remembering our son, Ben Jan 22, 1992 to Aug 26, 2011.
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#4
sjrcpa  
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You can't efile the 2018 return now. It's too late.
 

#5
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You can't efile the 2018 return now. It's too late.

My tax software is saying I can. Why do you believe I can't e-file it at this time?
 

#6
sjrcpa  
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IRS rule is current and 2 prior years. 2021, 2020, and 2019.
 

#7
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You are correct: Publication 4163 section 3.5

That's a bummer.
 

#8
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I'm amending a 2018 1120S.


Why? Is the 3-year or 6-year SOL at play? Did he file the 2018 1120S really late or something?
 

#9
JR1  
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Sounds like rather significant mis-statement of income.
Go Blackhawks! Go Pack Go!
Remembering our son, Ben Jan 22, 1992 to Aug 26, 2011.
For FB'ers: https://www.facebook.com/groups/BenRoberts/
 

#10
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The shareholder's 2018 1040 was filed in 2020 (late) with a three year SOL I believe. The 1120S was filed on the extended due date 9/15/19.

The shareholder wants to correct the mistake despite having explained the SOL issue with them.
 

#11
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Seems cheaper to just stroke a check to the IRS.
Steve
 

#12
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I'm not going to push the client on the issue. They decided and have the means to pay the bill.
 

#13
JR1  
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gatortaxguy wrote:Seems cheaper to just stroke a check to the IRS.


Steve, are you ok? Wow. So NOT like you.......
Go Blackhawks! Go Pack Go!
Remembering our son, Ben Jan 22, 1992 to Aug 26, 2011.
For FB'ers: https://www.facebook.com/groups/BenRoberts/
 

#14
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I think I'm OK. I just don't see the point of amending and stroking a check when one could just stroke the check. What benefit flows from the amendment?
Steve
 

#15
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when one could just stroke the check.

Please advise/elaborate. I may be dumb but I want to do better.
 

#16
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My apologies for the snarky comments.
What is the client's concern that is driving this solution?
Steve
 

#17
JR1  
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You can't just stroke a check without the amendment....
Go Blackhawks! Go Pack Go!
Remembering our son, Ben Jan 22, 1992 to Aug 26, 2011.
For FB'ers: https://www.facebook.com/groups/BenRoberts/
 

#18
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What is the client's concern that is driving this solution?

Statute on their personal return is open another 12+ months from now because late filing of the 2018 return, plus guilt. S corp statute has another 7.5 months.
 

#19
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How does amending improve the situation?
Steve
 

#20
JR1  
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gatortaxguy wrote:How does amending improve the situation?


uh, it fixes it...gets it right, no flashlights thru the windows in the night...or fear of them anyway.
Go Blackhawks! Go Pack Go!
Remembering our son, Ben Jan 22, 1992 to Aug 26, 2011.
For FB'ers: https://www.facebook.com/groups/BenRoberts/
 

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