Discussion:SBA Origination Fee
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Discussion Forum Index --> Tax Questions --> SBA Origination Fee
| 25 February 2007 | |
| A client paied a 1% Loan Origination fee on a mortgage, which I'm claiming as a deduction for "points". But in addition they paid a SBA Origination fee to the bank... same amount. Is the SBA fee deductible this year?
Jim | |
| 25 February 2007 | |
| This isn't a residence, so it has to get amortized anyway. | |
| 25 February 2007 | |
| Doesn't sound like the mortgage proceeds were used to acquire or improve a principal residence. If my assumption is correct, then the points must be amortized over the term of the loan. | |
| February 25, 2007 | |
| If this is a business mortgage loan, all of the fees and points paid to obtain the mortgage should be amortized over the life of the loan. | |
| 25 February 2007 | |
| OK... additonal info for clarity, then a follow up question.
The mortgage was on a personal residence, with proceeds used to purchase a retail store in the name of the homeowner's S Corp. Question: Where does the loan get amortized? In other words, on which return (S Corp or 1040?) and on what form? (4562?) | |
| 25 February 2007 | |
| Amortization of points follows the interest deduction...i.e. if interest is deducted on Sched A then the points are too. Sounds like your client borrowed money to fund the S corp, either as capital contribution or a loan. You have options and should analyze the best overall tax treatment. | |
| 26 February 2007 | |
| Who borrowed the money? If the individual borrowed the money, the interest would ordinarily be deducted on page 2 of Sch. E (form 1040). If the corporation borrowed the money, the interest would ordinarily be deducted on page 1 of the 1120S. | |
Bottom Line (talk|edits) said: | 26 February 2007 |
| I would agree. SBA normally grabs everything there is. | |
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