Shareholder A in an S-corporation had $0 stock basis and $100,000 of Debt basis (from loans provided to the corp over the past few years - that have never been paid back). 

Shareholder A wishes to no longer be involved in the business.   Shareholder B wants to continue the business.   Shareholder A agrees to take payments on the loan.  

Questions are this:  

1.  How are the payments treated?

2.  What happens to the Debt basis?

3.  What happens to the Shares owned by A?