Hi,

Thank you for the forum's efforts to help those in need.

I have a small Nevada S corp and borrowed on two short term notes with friends intending to take small equitable positions despite start up losses last 2 years. The size and duration of notes did not require the notes to be registered. On expiration of notes an equitable distribution of shares relative to the note size is recorded. On the books a loss is recorded from normal operations pending growth in business cycles. During the same year one note has expired > 6 months, the other has not yet, now into 2015.

My question is if the conversion to equity absent any gains, holds a taxable exposure in any manner? I would think not until or unless the firm gains or a partner were to file write off losses or gains otherwise as might occur in 2015. This year an extension filing needs to estimate taxable liability so I'm trying to confirm if the note conversion falls into tax exposure in any way I'm not realizing. We unfortunately lost our tax preparer late this week when they fell behind severely, so I'm just hoping to make sure.

Thanks much,

Urban