I own 100% of an S-Corp and I have an outstanding loan from the corporation (TO me, the shareholder). Do I have to pay the loan BEFORE investing money into the business?
I own 100% of an S-corporation that had a loss of 20,000.00 in 2013. Throughout 2013 I borrowed about 15,000.00 FROM the business (the money were borrowed in multiple transactions, and I have created all the loan petty paperwork for each transaction, charging my self interest, etc). Instead of paying back the loan in 2013, I invested money back into the corporation (about 7,000.00), which increased my basis (to about 7,000.00). I have not taken a salary in 2013, and I have paid back the 15K loan in full on February of 2014. Does the IRS requires me to pay back the loan before increasing my basis, (by investing those 7,000 into the company)?
P.S I rather have basis into the company to be able to pass some of the loss to my personal income, since my wife and I could use the loss to get a bigger tax refund from her full time job.