How the shareholder treats a distribution with liability attached?
Let say a C-Corp distributes property to a shareholder.
Loan: $20,000 (Assumed by shareholder)
I know on the corp side. the current earning profit(CEP) will +40,000, and the distribution will be $80,000. And the Liability $20,000 increase the CEP. CEP $60,000, and Distribution $80,000. So $20,000 will reduce the Accumulated Earning and Profit(AEP)
And on the shareholder, the shareholder will report a $80,000 distribution, but how the shareholder treats the loan? what form they should report. And, please correct me if I am wrong.
Last edited by bbmak : 01-30-2013 at 04:58 PM.