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Discussion Forum Index --> Advanced Tax Questions --> Loan from profit sharing plan
Discussion Forum Index --> Tax Questions --> Loan from profit sharing plan
Davidlat (talk|edits) said:
| 28 January 2008
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| I have a client who is a c corp with a profit sharing plan. The only employees of the corp and persons in the profit sharing plan are family memebers. The client wants to loan 100% of the profit sharing assets to the c corp. Interest will be charged on the loan, all of the proper loan documents will be signed. The loan will be secured by real estate. I don't think this is a good idea. Any other thoughts pro or con?
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Kevinh5 (talk|edits) said:
| 28 January 2008
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| does the plan even allow this? Seems after ENRON that this type of dirty dealing wouldn't be allowed.
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RJM (talk|edits) said:
| 28 January 2008
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| Think this might be a "prohibited transaction" as a form of self-dealing. There is a lot of DOL and IRS clamp-down on these types of arrangements the last few years. There are a number of so-called professional firms who are in the business of setting up these transactions. If discovered on audit the consequences to the participant/owners are enormous !
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Taxtips (talk|edits) said:
| 29 January 2008
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| Believe that this would be a prohibited transaction.
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