In 2019 when the economy was going strong, ABC S-corporate recorded a loan to the 100% shareholder to pay estimated taxes (booked as a shareholder loan).  Normally, the following March (2020), dividends are paid for the remaining tax due to the shareholder and to pay off the loan which paid the est taxes.  The loan would be paid off with the dividend payment.   With the 2020 economy tanking, the taxpayer now has a $500,000 loss.  If the dividend is declared, the taxpayer would owe capital gains tax on the distribution because he has no basis to take the distribution from.  Has anyone else run into this?  What did you do?  I am thinking of keeping it on the books as a loan and wait until the company makes money in order to make the dividend payment which pays off the loan to the shareholder for the tax disbursements.  If we would have declared and paid the dividend in 2019, this wouldn't be an issue because the shareholder had basis.  Now, with the loss, he has no basis (loss in excess of basis). What is everyone else doing?