“If a distribution to a shareholder was made and classified as Loan to Shareholder can that Loan to shareholder be a tax deductible expense for the year it was distributed..”----->I am NOT quite sure whst your question is: in general. A S Corp sh/owner can advance money to the S-Corp as a loan. For example , a sh/owner pays for company expenses using his personal credit card, and submits an expense report to the company for repayment. Shareholder's making loans (both ST/LT loans)to their S-Corp may take a tax deduction in the current year for losses in excess of their stock basis, but only to the extent they have loan basis. However, if you purchase the shares of an S corporation, you may receive periodic dividend payments, depending on the firm's financial situation and management's decisions. S corp distributions are periodic dividends that shareholders receive either in cash or stock as cash dividends or stock dividends. I guess you understand the difference between an S corp distribution and a shareholder loan, you can see why you can't reclassify one as another. As an S corporation shareholder, you're entitled to receive periodic dividends, in accordance with the company's bylaws and based on management's assessment of the company's cash position. When you receive a dividend check, the money is yours. If you need extra cash, you may discuss with the firm's leadership to determine whether you could get a loan. But you can't reclassify cash that's already yours as borrowed money you must repay. Maybe a related question is whether you can reclassify an S corporation dividend as a loan you're granting the company. Even in this case, you wouldn't classify the new cash injection as a loan but as an equity investment.