Comment on FR Doc # 2012-14188

It would seem that S corporations should make all shareholders provide information that the claimed losses are bona fide. S corporations do not pay taxes, but instead pass the responsibilities onto their shareholders. If shareholders are constantly claimed an indebtedness to the organization, no taxes will ever be paid. S corporations are small in nature and simplistic, so there is a higher probability that shareholders are familiar with the financial situation of other members. In this case, shareholders can distribute losses in a strategic manner that would seem as if all members invested more money than they actually made. In an effort to combat this. Shareholders should be made to provide paperwork proving the loss. Shareholders do not pay normal FICA taxes on each payout, but simply claim the income on their year end taxes which further alleviates their responsibility to pay taxes and provides another reason to pass this rule. S Corporations provide a very tangible outlet for midsize companies to find investors but they should not be forgiven of all of their tax requirements, due in part to unethical shareholders.