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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15610
Experience:  15years with H & R Block. Divisional leader, Instructor
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If you have a loan from an "S" Corp that you are an owner of

Customer Question

If you have a loan from an "S" Corp that you are an owner of can you offset your salary to help pay back the loan?
Submitted: 4 years ago.
Category: Tax
Expert:  Robin D. replied 4 years ago.

Robin D :

Hello and thank you for using Just Answer,
It appears you are asking if your salary could be reduced and that count as a payback of the loan. This would not be allowed as the salary would still be subject to all withholding and taxes (for employee as well as S corp).
IRC section 1366 mandates that the shareholder report all income from the S corporation in the same manner as it is earned by the corporation.

Robin D :

Repayment of any loan from the shareholder to the S corp would not reduce the wages of the shareholder (employee).

Robin D :

If I have not interpreted your intentions please let me know before you rate. If I have, I thank you in advance for a positive rating.

Expert:  Robin D. replied 4 years ago.
Let me know if you need more information or if the situation is not what I understood.