Discussion:Loan from partner-construction interest
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Revision as of 17:26, 7 September 2009
Discussion Forum Index --> Advanced Tax Questions --> Loan from partner-construction interest
Discussion Forum Index --> Tax Questions --> Loan from partner-construction interest
| 7 September 2009 | |
| My client has loaned several hundred thousand dollars to partnership for purposes of constructing several condos. The project began in summer of 2008 and is nearing completion at the end of this year. The partners have agreed to a loan interest rate of prime + 1% of the funds lent by one of the partners. The interest is not due to the partner until one of the condo's sells.
Questions: 1. Does imputed interest apply since the partnership did not actually pay any interest on the debt in 2008 even though the interest rate and interest accruing is not at a lower than market rate? 2. Should I prepare and entry on their books (no interest is yet recorded) to debit interest expense and record interest payable to the shareholder? Then capitalize this interest to the construction in progress? 3. Does the partner/lender have any interest income personally in 2008 if imputed even though construction loan interest is capitalized at partnership level? | |
