Hello,
I have S corp - initial and final year as 2013 - sold the business during 2013 - has a loss of 25K and the ending loan basis from shareholder is 25K at the end - certainly this loss (ordinary operating loss and ordinary loss on sale since less than a year) is deductible as the s/h has loan basis.

I did a Journal entry for closing the loan from s/h:
Loan from S/H Debit 25K
AAA Account Credit 25K
So my books are done.

Now in tax return - how do I show this increase / credit of 25K in AAA, Schedule M-2?
I was thinking about putting it on Line 3, Other additions in Schedule M-2 of 1120S by labeling as "Deemed Contribution"

Would it be appropriate?

Thanks,
Sammie