This post will no doubt reveal my gross ignorance on this topic, but a colleague of mine has an issue that made me realize I didn't understand a very fundamental matter in regard to corporate ownership. Two gentlemen formed a corporation (s-corp election), each contributed an equal amount of capital and co-signed on a loan. Both claimed a loss two years running (which pretty much wiped out their original contribution). Last year, one of the shareholders paid off the loan. Now, as typical of many poorly-advised clients who started corporations, they probably never issued stock or ever had a board meeting. Has paying off this loan affected the ownership of the business, or just their individual basis? Thanks.
- posted
14 years ago