How do you report S-corporation Shareholder loans / capital contributions?
As the owner of the S-corp, it is far easier for you to move money in/out of the company as contributions and distributions rather than making loans to the company. Loans require interest payments, 1099-INT forms, and have tax consequences, whereas the distributions don't need to be reported because you pay taxes on net profits regardless of whether the money was distributed. If you were paid interest, disregard this answer. I don't know if or how you could re-categorize the loan once there's a 1099-INT involved. If no interest was ever paid, you just need to account for it properly: If the company didn't pay you any interest and never issued you a 1099-INT form (i.e. you wrote a check to the company, no promissory note, no tax forms, no payments, no interest, etc.) then you can categorize that money as a capital contribution. You can likewise take that money back out of the company as a capital distribution and neither of these events are taxable nor do they need to be reported to the IRS. In Quickbooks, create the following Equity accounts -- one for each shareholder making capital contributions and distributions: When putting money into the company, deposit into your corporate bank account and use the Capital Contribution equity account. When taking money out of the company, write yourself a check and use the Distributions account. At the end of every tax year, you can close out your Contributions and Distributions to Retained Earnings by making a general journal entry. For example, debit retained earnings and credit distributions on Dec 31 every year to zero-out the distributions account. For contributions, do the reverse and credit retained earnings. There are other ways of recording these transactions -- for example I think some people just use a Member Capital equity account instead of separate accounts for contributions and distributions -- and QB might warn you about posting journal entries to the special Retained Earnings account at the end of the year. In any case, this is how my CPA set up my books and it's been working well enough for many years. Still, never a bad idea to get a second opinion from your CPA. Be sure to pay yourself a reasonable salary, you can't get out of payroll taxes and just distribute profits -- that's a big red flag that can trigger an audit. If you're simply distributing back the money you already put into the company, that should be fine.
&gt; At $31 billion, GE’s pension shortfall is the biggest among S&amp;P 500 companies and 50 percent greater than any other corporation in the U.S. It’s a deficit that has swelled in recent years as Immelt spent more than $45 billion on share buybacks to win over Wall Street and pacify activists like Nelson Peltz. &gt;  &gt; Part of it has to do with the paltry returns that have plagued pensions across corporate America as ultralow interest rates prevailed in the aftermath of the financial crisis. But perhaps more importantly, GE’s dilemma underscores deeper concerns about modern capitalism’s all-consuming focus on immediate results, which some suggest is short-sighted and could ultimately leave everyone -- including shareholders themselves -- worse off. The short answer, probably not much.  Unless you have a controlling interest in the company.  If at least 50%+1 of the shareholder votes are in favor of the dilution then it can be done.  There are some SEC rules that should protect against corporate looting and theft like what the Severin side is trying to make it appear as happened. However it would appear that Severin did something stupid.  He signed away all of his voting right to someone who would use them to make his rights basically worthless.  Had he kept his head in the game he could probably have saved himself.  But he didn't. If your average startup started issuing lots of stock and devaluing existing shares significantly then I would expect it would be harder to find investors willing to watch as their investment dwindled.  But if you are issuing a limited amount stock to get leverage to grow bigger then it is worth it.  In the .com bubble there were quite a few companies that just issued stock to buy other companies.  Eventually most of these companies got delisted because they diluted them selves to much when they were overvalued. Any company not just a startup can dilute its shares.  Many if not most major companies issue stock to raise capital.  This capital is then generally used to build the business further and increase the value of all shares.  Most of the time this dilution is very minor (<.1%) and has little if any impact on the stock.  There are rules that have to be followed as listed companies are regulated by the SEC.  There are less regulations with private corporations.  It looks like the dilution was combined with the buyout of the Florida company which probably contributed to the legality of the dilution.     With options they are generally issued at a set price.  This may be higher or lower than the reported sell price of the stock when the option is issued.  The idea is over time the stock will increase in value so that those people who hold on to their options can buy the stock for the price listed on the option.  I worked at an ISP start up in the 90's that made it pretty well.  I left before the options were issued but I had friends still there that were issued an option at $16 a share the value of the stock at the time of the issue of the option was about 12.  Well the company diluted the shares and used them to acquire more ISP's unfortunately this was about the time that DSL And cable internet took off so the dial up market tanked.  The value eventually fell to .10 they did a reverse split and when they did the called in all options.  The options did not have a positive cash value at any time.  Had RMI ever made it big then the options could have been worth millions.  There are some people from MS and Yahoo that were in early that made millions off of their options.  This became a popular way for startups to attract great talent paying peanuts.  They invested their time in the business hoping to strike gold.  A lot of IT people got burned so this is less popular among top talent as the primary compensation anymore. They take in a *lot* through Corporation Tax, so it'd be relatively unfair to non-business owners and non-shareholders to put it onto VAT and income tax. In the Starbucks case, they'd still want to get the money out of the country so would end up paying no more tax than now.  One alternative along the lines you state, though, would be to crank up capital gains and dividend taxes to match what's taken in by Corporation Tax now. After all, those are the other ways (than income) for owners and shareholders to extract value from corporations and would be tricky to dodge unless you're outside of the EU. "This is actually quite a complicated issue. I suggest you talk to a properly licensed tax adviser (EA/CPA licensed in your State). Legal advice (from an attorney licensed in your State) is also highly recommended. There are many issues at hand here. Income - both types of entities are pass-through, so ""earnings"" are taxed the same. However, for S-Corp there's a ""reasonable compensation"" requirement, so while B and C don't do any ""work"" they may be required to draw salary as executives/directors (if they act as such). Equity - for S-Corp you cannot have different classes of shares, all are the same. So you cannot have 2 partners contribute money and third to contribute nothing (work is compensated, you'll be getting salary) and all three have the same stake in the company. You can have that with an LLC. Expansion - S-Corp is limited to X shareholders, all of which have to be Americans. Once you get a foreign partner, or more than 100 partners - you automatically become C-Corp whether you want it or not. Investors - it would be very hard for you to find external investors if you're a LLC. There are many more things to consider. Do not make this decision lightly. Fixing things is usually much more expensive than doing them right at the first place." i work at a bank. if a private company that we've never heard of wants a loan, we will be more hesitant than if it were a public, household name covered by equity research analysts. requires more due diligence on our part. if they get s&amp;p or moody's ratings, that makes us more comfortable. the company wants the loan more than we want to lend to them, so in my mind, they should be the one paying for it.  i agree that this creates a conflict of interest, and recognize that conflict when using the research. The actual financial statements should always be referenced first before opening or closing a position. For US companies, they are freely available on EDGAR.  Annual reports are called 10-Ks, and quarterly reports are called 10-Qs. YHOO and GOOG do a great job of posting financials that are quickly available, but money.msn has the best.  These should be starting point, quick references.  As you can see, they may all have the same strange accounting. Sometimes, it's difficult to find the information one seeks in the consolidated financial statements as in this case, so searching through the filing is necessary. The notes can be helpful, but Ctrl-F seems to do everything I need when I want something in a report. In AAPL's case, the Interest expense can be found in Note 3. Here is one the links for Goldmansachs. Not to state the obvious, but most of their research is only available to their clients. http://www.goldmansachs.com/research/equity_ratings.html "Here's a very basic MySQL query I put together that does what I want for  income/expense report. Basically it reports the same info as the canned income/expense report, but limits it those income/expenses associated with a particular account (rental property, in my case).  My main complaint is the output ""report"" is pretty ugly. And modifying for a different rental property requires changing the code (I could pass parameters etc). Again, the main ""issue"" in my mind with GnuCash income/expense report is that there is no filter for which account (rental property) you want income/expenses for, unless you set up account tree so that each rental property has its own defined incomes and expenses (i.e. PropertyA:Expense:Utility:electric).  Hopefully someone will point me to a more elegant solution that uses the report generator built into GnuCash. THanks! SELECT a2.account_type , a4.name, a3.name, a2.name, SUM(ROUND(IF(a2.account_type='EXPENSE',-  s2.value_num,ABS(s2.value_num))/s2.value_denom,2)) AS amt FROM    (     SELECT  s1.tx_guid     FROM    gnucash.accounts AS a1         INNER JOIN gnucash.splits AS s1 ON s1.account_guid = a1.guid     WHERE   a1.name='Property A'         ) AS X     INNER JOIN gnucash.splits s2 ON x.tx_guid = s2.tx_guid     INNER JOIN gnucash.accounts a2 ON a2.guid=s2.account_guid     INNER JOIN gnucash.transactions t ON t.guid=s2.tx_guid     LEFT JOIN gnucash.accounts a3 ON a3.guid = a2.parent_guid     LEFT JOIN gnucash.accounts a4 ON a4.guid = a3.parent_guid WHERE   a2.name <> 'Property A' # get all the accounts associated with tx in Property A account (but not the actual Property A Bank duplicate entries.         AND t.post_date BETWEEN CAST('2016-01-01' AS DATE) AND CAST('2016-12-31' AS DATE) GROUP BY a2.account_type ,a4.name, a3.name, a2.name  WITH ROLLUP ; And here's the output. Hopefully someone has a better suggested approach!"