Scorp shareholder took too much money out for 2018. Only about 13,000 too much, but too much, so we have an excess distribution situation. I know most (including myself) would book this as a Loan to Shareholder, but in this case we don't want to do that.
My assumption is I report on Schedule D, with 13,000 LT gain, zero basis and just call it "excess Distributions XXX, Inc EIN#:XX-XXXXX".....correct?
But in all this I got to thinking (scary).......Is this excess distribution just TREATED to be a sale of stock for tax purposes, or is it ACTUALLY a sale of stock?? If the latter, what happens to the S-corp if no one owns the stock??
Just making sure I am not invalidating his S-election in some way.
Thanks!