LLC taxed as S-Corp - how do I handle the initial investment of $5000
I have an LLC who elected to be taxed as an S-corp. The initial investment was $5000. Do I show the $5000 as Capital Stock, PIC or shareholder loan?
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cIitfskU4r346iacfA8pyY
03/08/10 12:13pm PST
Viewed by asker 03/08/10 3:51pm PST
Viewed by asker 03/08/10 3:51pm PST
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Amy-in-PA
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03/08/10 12:22pm PST
One thing I'd say you DON'T show it as, is a loan. It's the initial investment. It sounds like equity to me. Is there such a thing as "member's capital?" Would you call it that? Then again, on the tax return (regardless of what you call it on the books), you have an 1120S form, so most likely you have capital stock, unless you want to call it "paid-in-capital" because the member didn't literally buy the stock of a corporation -- (s)he bought membership in an LLC, and the LLC later elected to be taxed like an S-Corp.
I guess P-I-C probably makes the most sense.
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LeslieM
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03/08/10 3:47pm PST
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Initial investment is owner's equity -- whatever term you want to use.
Don't use "loan" unless there was a loan agreement at the time it was created, interest is being charged, and all of the other trappings of a legitimate loan exist.
