This is my first year (2016) in business as an S Corp. As the sole shareholder and 100% owner of the company, I contributed approximately $2000 to the company throughout the year. However, my company operated at a loss of $1500 this year. The company also doesn't have any loans on its books, neither by me nor a bank.
I understand that all profits and losses pass through to the shareholder and that I will ultimately be able to deduct $1500 from my income in my personal tax returns.
However, what would this look like in my company's balance sheet?
- Given that I took the benefit of this $1500 loss, do I somehow
increase the net revenue by $1500 in Dec 31 or Jan 1 to bring this to $0? I ask because other wise, what if I lose an additional $1000 in 2017? Then I'd pass through a loss of $2500 in my 2017 returns(?)
- And because this loss of $1500 passes through to me and my basis in the S Corp is $2000, does my basis decrease by $1500?
- How would both of these events be recorded as journal transactions?
Thanks for your help guys.