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contributed capital represents the company's liabilities so if an owner loaned money to the company and we owed them back, is this still considered contributed capital?
Submitted: 40 days and 1 hours ago.
Category: Finance
Value: $9
Status: CLOSED
Accepted Answer
Hello,
Thank you for your question.
Contributed capital is not actually a liability account. It is part of owner's equity which means that the company has no obligation to pay the owner back until the company is dissolved. If it is an actual loan from the owner, it should be recorded as a liability such as "Loans from owners". IRC Sec. 7872 imputed interest rules may apply if the interest rate on the loan being charged to the company by the owner is less than the current federal rate.
Hope this helps,
best regards,
Expert:
JK_CPA
Pos. Feedback:
100.0 %
Accepts:
Answered:
10/13/2009
Certified Public Accountant (CPA)
with 5 years Accounting and 18 years tax experience.
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