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b'Shareholder debt to S corporations has proven to be a minefield for shareholders and their advisers, and the taxpayer and their adviser in the case of Ruckriegel v. Commissioner managed to step on a shareholder debt/basis mine twice in two consecutive IRS exams.\\xa0 In this case, the shareholders attempted to argue that loans from a partnership they controlled were actually loans to them from the partnership, followed by loans to the corporation.

Or, to put it more correctly, their CPA attempted to argue that.\\xa0 One of the problems in this case, beyond the simple fact that the form of the transaction (which the taxpayers had control over) did not agree with what they were arguing was the true substance, was the fact that neither the taxpayers nor their inside accountant were treating these loans as if they had traveled that indirect route.\\xa0 The case points up the dangers of attempting to "after the fact" correct client missteps--and especially continuing to do it for multiple years.

The materials for this podcast are found at http://edzollars.com/2006-04-29_Debt.pdf.

This podcast is sponsored by Leimberg Information Services, on the web at http://www.leimbergservices.com.

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