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Personal Bankruptcy/Loan to S-Corp (Michigan)

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D

Dillon

Guest
I am not a law or accounting student. I have completed 16 credits in accounting and have worked in accounting, but this is over my head and I cannot afford professional help. I am attempting to complete income tax preparation for the years 1998, 1999 and 2000 involving a situation in which I am 100% shareholder in an S-Corporation. I initially loaned the Corporation a considerable amount of capital. This is reflected on the Corporation’s balance sheet in 1997. All Federal Income Tax Returns were filed for 1997.

In 1998, I filed personal bankruptcy, a Chapter 13 Reorganization, in order to reduce personal debts incurred on behalf of the Corporation. The equipment of the Corporation was retained, but the actual operation of the business was halted until further operating funds could be obtained. There was no income in 1998. Federal Income Tax Returns are not filed for 1998.

There is still no income to the Corporation for 1999, and payments are still made to the Trustee for the shareholder’s personal Chapter 13 Reorganization. Federal Income Tax Returns are not filed for 1999.

There is still no income to the Corporation for 2000, and payments are still made to the Trustee for the shareholder’s personal Chapter 13 Reorganization. Additionally, in 2000 Corporation equipment which was pulled from storage is damaged by movers. No reimbursement of damages is made to the Corporation. It further appears that legal counsel will be required to collect damages. Unfortunately, neither I nor the Corporation has funds required to retain legal counsel. Therefore, collection is doubtful and equipment will likely be sold at salvage.

1) What is the correct way to report the shareholder loan on the 1120S of the S-Corporation? Is it in some way reduced by the shareholder’s bankruptcy payments? In other words, does the personal bankruptcy of the shareholder affect the amount due to the shareholder by the non-income producing Corporation? The loan was not listed in the bankruptcy.
2) Does the shareholder’s personal bankruptcy affect the 1120S at all?
3) How is the bankruptcy handled on the shareholder’s 1040?
4) Does the damaged equipment affect the status of the bankruptcy in any way?

Information, advice, references, comments--any and all are appreciated.

Thank you,
[email protected]
 


T

Taxguy

Guest
>>I am not a law or accounting student. I have completed 16 credits in accounting and have worked in accounting, but this is over my head and I cannot afford professional help.<<

Yes, it most like is. But unless you find some one locally who id willing to do the work for free, this is much too complex , and time consuming , to do in a WEB Forum.

Sorry.

 
L

loku

Guest
Complex problem

I very much agree with taxguy, and I would like to add that one would have to see the books and other pertinent documents to make any valid judgments about this.
 

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