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Lane
Lane, JD, CFP, MBA, CRPS
Category: Finance
Satisfied Customers: 9188
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Preparing schedules L and M for my tax return and my shareholders

Resolved Question:

Preparing schedules L and M for my tax return and my shareholder's equity is negative. Is that ok? There are more loans on the liabilities than the company has in assets. To balance it out I show negative SHE.

so for example

cash 100k
asset land 300k
-------------------
land loan 400k
loan from SH 100k

SHE -100k
Submitted: 2 years ago.
Category: Finance
Expert:  Lane replied 2 years ago.

Lane :

Yes, that's fine ... an excellent way to keep track on outside basis for purposes of any future ability to take a loss

Lane :

Questions?

Lane :

I still don't see you coming into the chat. ... I'll move us to the "Question and Answer" mode Maybe that will help (We can still continue a dialogue there, just not in real-time as we can here) Let me know if you have further questions

Lane :

Lane

Lane, JD, CFP, MBA, CRPS
Category: Finance
Satisfied Customers: 9188
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Lane and other Finance Specialists are ready to help you
Expert:  Lane replied 2 years ago.


Hi AJ,

... just checking back in here, as I never saw you come into the chat.

Let me know if you have further questions,

Lane

Customer: replied 2 years ago.

Thank you very much. I am just starting out in the field and my boss felt very uncomfortable with my preparation of the schedules. I was almost positive that is what I learned in college for the appropriate way to show it, but in his mind negative SHE does not exist.


 


I see it as hey they're over-leveraged, there is no equity.


 


Thank you

Expert:  Lane replied 2 years ago.

You have it exactly.

Now, maybe he can make a case for some speculative sales price (FMV) taking that back to positive, but from an accounting perspective you're there.

Lane

Expert:  Lane replied 2 years ago.

Thanks AJ,

Lane