PLLC taxed as an S-corporation - is it subject to the debt basis rules of a partnership or an S-corp? i.e. Can loans to S-corp guaranteed by shareholder increase basis?
An entity was set up as a PLLC but elected to be taxed as an S-corporation. The entity has bank loans which are guaranteed by the owner. If using the LLC rules, the owner could increase his basis by the amount of guaranteed loans. However, under S-corporation rules the basis could not be increased. Which set of rules must be followed for this hybrid entity?