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.
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.