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Sole shareholder of S Corp did not take any distributions but contributed cash to the business. The business incurred a loss in 2020.
How does the cash contribution get reported? To Retained Earnings as a negative distribution or to Additional Paid in Capital?
It seems as though APIC would be the correct treatment. Will the shareholder receive basis for the cash recorded as APIC - reported as stock contribution on the Stock and Loan Basis Info Worksheet? Can APIC be reduced for any future distributions once retained earnings are reduced?
Thank you for your help.
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Do not record as a loan unless it really is with loan paper work, and it would be added to shareholders loan basis. If not a loan then APIC adding to shareholders stock basis. Scorp's do not have retained earnings, unless it was a Ccorp in past.