Discussion:S Corp Loan
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Discussion Forum Index --> Tax Questions --> S Corp Loan
| 24 February 2007 | |
| S Corp owner took out $150,000 mortgage loan on his personal residence to purchase an existing retail business (ie, put the loan money in the S Corp checking account, and then wrote a check to purchase
the store). Is this: (a.) a loan on the S Corp books (with interest expense deductible to the entity), or... (b.) a loan from related party? (with loan payments actually recorded as distributions to the shareholder, and non deductible as far as the entity tax return is concerned?) Thanks in advance, Jim | |
| 24 February 2007 | |
| It is a loan from the shareholder to the S Corp. The S Corp owes him, he owes the mortgage company. Interest paid should be reported on his Sch B as income, but he will have an offsetting investment interest expense if he itemizes. | |
| 24 February 2007 | |
| What is best? I am putting money into my business as a sole S-corp shareholder. My business is not able to survive on its own yet.
Should I treat this $ as a shareholder loan? Or as additional paid in capital? or is it the same thing? Thanks, | |
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