Question

Can the business repay some of the loan even if it doesn't make a profit

Forum|Forum|2 years ago
February 20, 2024
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Can a business repay a loan made by a partner even if the business has a loss at the end of the year

TurboTax Business Windows

Can you clarify the details of the loan? Is it a loan to the business made by the partner? If so, yes the business can repay the loan even if it did not make a profit. If it was different type of loan, please provide additional information.

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L

lavtrenAuthor

Yes it was a loan to the company by a partner. There is still a balance on the loan. Also when I loan cash to the business is it considered as a capital cash contribution and when I repay myself is it considered a capital xcash reimbursement. Not sure where to put the amounts in TurboTax Thanks for your help

M

MinhT1

A loan isn't a capital contribution. A loan appears on the liability side of the balance sheet of the business. A loan repayment isn't a capital reimbursement.

If the business files as a partnership (form 1065), the loan is reported on line 19a - Loans from partners of Schedule L.

If the business files as an S-Corp (form 1120S), the loan is reported on line 19 - Loans from shareholders of Schedule L.

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