The EBITDA Cash Flow Proxy and the UCA Cash Flow Statement
Q: Where are loans to shareholders reported on the business income tax return? Are they reported on the Schedule K-1?
A: On federal business income tax returns, loans to owners are reported on Schedule L – the accrual balance sheet. Loans to owners are not reported on Schedule K-1, but loan repayments to owners of Subchapter S corporations are reported on Schedule K-1 (Form 1120S).
In no case do loans or loan repayment impact the owner’s or partner's taxable income passed to him or her from the pass through entity.
Course overview: The EBITDA Cash Flow Proxy and the UCA Cash Flow Statement