Loans From Shareholders on Schedule L in UltraTax CS
Loans from shareholders go on Schedule L line 19, and UltraTax computes the year end principal from the Loan tab of the Shareholder Basis dialog: beginning balance plus current year loans less repayments. A diagnostic prints when the total shareholder loan principal does not agree with Schedule L line 19(d), which is the reconciliation worth taking seriously.
- Shareholder Information
- Other Info tab
- Shareholder Basis dialog
- Loan tab
| Trial balance account | UltraTax CS screen and field | Lands on |
|---|---|---|
| Loans from shareholders | Screen L liabilities | Schedule L line 19 |
| Loan basis detail | Loan tab of the Shareholder Basis dialog | Shareholder Basis Worksheet |
| Year end principal | Computed: beginning plus loans less repayments | Compared to Schedule L line 19(d) |
| Mismatch | Diagnostic against Schedule L line 19(d) | Schedule L line 19 |
| Loans to shareholders, the other direction | Screen L assets | Schedule L line 7 |
| Interest on the loan | Interest expense, and income to the shareholder | Page 1 interest line |
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Try it freeLoans From Shareholders on Schedule L in UltraTax CS on a trial balance
| Acct # | Account | Debit | Credit |
|---|---|---|---|
| 1000 | Cash | 42,800.00 | |
| 1200 | Accounts receivable | 68,500.00 | |
| 1300 | Inventory | 55,000.00 | |
| 1500 | Equipment | 145,000.00 | |
| 1510 | Accumulated depreciation | 47,500.00 | |
| 2000 | Accounts payable | 28,400.00 | |
| 2100 | Accrued expenses | 9,200.00 | |
| 2400 | Notes payable | 92,000.00 | |
| 2450 | Due to shareholder (the account this page is about) | 15,000.00 | |
| 3000 | Common stock | 10,000.00 | |
| 3900 | Retained earnings | 86,300.00 | |
| 3950 | Shareholder distributions | 52,000.00 | |
| 4000 | Gross receipts | 612,000.00 | |
| 5000 | Cost of goods sold | 318,000.00 | |
| 6000 | Salaries and wages | 88,000.00 | |
| 6050 | Officer compensation | 72,000.00 | |
| 6300 | Depreciation expense | 21,500.00 | |
| 6900 | Other operating expenses | 37,600.00 | |
| Total | 900,400.00 | 900,400.00 |
Example journal entries
| Account | Debit | Credit |
|---|---|---|
| Cash | 15,000.00 | |
| Due to shareholder | 15,000.00 |
| Account | Debit | Credit |
|---|---|---|
| Other operating expenses | 3,400.00 | |
| Due to shareholder | 3,400.00 |
| Account | Debit | Credit |
|---|---|---|
| Interest expense | 900.00 | |
| Due to shareholder | 900.00 |
The reconciliation UltraTax performs for you
Loan basis is computed from the Loan tab of the Shareholder Basis dialog: beginning balance, plus current year loans, less repayments, giving the year end principal.
UltraTax then compares that total against Schedule L line 19(d) and prints a diagnostic when they disagree. That is a genuine control, and it catches the most common bookkeeping shortcut: a repayment netted against the loan account in the general ledger and never entered in the basis detail.
Resolving it means deciding which figure is right, which usually means looking at the bank activity rather than the ledger.
Both directions, two lines
Money the shareholder lent the company is a liability on Schedule L line 19. Money the company lent the shareholder is an asset on line 7.
They are reported separately, and netting them hides exactly what the return asks about. If a shareholder owes the company under one arrangement and is owed under another, both sides belong on the balance sheet.
Whether it is really a loan
The balance sheet treatment is easy. The question that matters is whether the arrangement survives as debt, and the factors are the familiar ones: a written note, a market rate of interest, interest actually accrued, repayments that happen, and a balance that goes down over time rather than up.
A shareholder loan that grows every year with no note and no interest is not a loan in substance. On an S corporation it tends to be recharacterized as a distribution or as compensation; on a C corporation, as a constructive dividend, which is the most expensive outcome because it is taxable to the shareholder and not deductible by the company.
Why the direction matters for basis
A loan from the shareholder to the corporation creates debt basis, which can let losses through after stock basis is exhausted. A loan the shareholder merely guaranteed does not, because a guarantee is not an economic outlay.
And repayment is not always neutral: where debt basis has been reduced by losses, repaying the loan can produce income for the shareholder. That is a surprise worth preventing, because the client experiences it as being taxed on getting their own money back.
Tax return treatment
| Form | Line |
|---|---|
| Form 1120S | Schedule L line 19, loans from shareholders, and debt basis |
| Form 1120 | Schedule L line 19, loans from shareholders |
| Form 1065 | Partner loans, with the liability allocation in item K of the K-1 |
Common questions
Where do loans from shareholders go on Schedule L?
Line 19, loans from shareholders. Money the company lent the shareholder goes the other way, on line 7, and the two are reported separately rather than netted.
Why does UltraTax print a diagnostic about shareholder loan principal?
Because the total principal computed from the Loan tab of the Shareholder Basis dialog does not agree with Schedule L line 19(d). It usually means a loan or a repayment was recorded in the general ledger but never entered in the basis detail.
Does a shareholder guarantee create debt basis?
No. A guarantee is not an economic outlay. Only a direct loan from the shareholder to the corporation creates debt basis that can absorb losses once stock basis is exhausted.
Is repaying a shareholder loan taxable?
Repaying a bona fide loan is generally not taxable, with one important exception: where debt basis has been reduced by losses, part of the repayment can be income to the shareholder. That is the case clients find most surprising, so it is worth raising before the repayment is made.
Related answers
Go deeper
This page is the short answer. These articles work through the same ground in detail.
Last reviewed October 18, 2026.