---

@qbteachmt wrote:

"The 3% shareholder may well be a shareholder and not a lender. A lender would not get a percentage of the profit,"

 

Shareholders get distributions pro rata to the shares they own. If anyone gets distributions, they all get them and get them relative to their ownership position. If a "3% shareholder" is getting some other agreed-upon %, then that seems like part of what they got is their "lender" quotient, and you would need to separately track these amounts and reasons.

---

Or worse, their stock gets preferred dividends for a specified period of time which blows the "one class of stock" requirement for the S Corp election.