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Where does S Corp shareholder cash contribution to the company get reported?

david3
Level 7

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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2 Replies 2
dkh
Level 12

You could do APIC or Loan from Shareholder if s/he is planning on withdrawing as soon as cash flow allows.

Terry53029
Level 12
Level 12

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.