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#22: Money To and From Your Company: For Owners, Executives, and Family

Objective: To help you stay out of trouble with the IRS and other owners on all loans to and from the company.

Applies to: Stockholders, partners, board members, employees, family members, and affiliated businesses owned by the company or its stockholders personally.

It seems simple enough: You need cash and the business has surplus money so you borrow from the company. Be careful: The IRS could decide that the transfer of money was not a loan at all, and reclassify it as taxable compensation to you or, worse, a dividend, which makes the loan amount taxable income to you but not tax deductible by the company.

That’s the big trap when you borrow from your company. Whenever the line between personal and business dealings gets fuzzy, as it does in personal loans from company funds, the IRS can be expected to step in and start drawing its own lines. And that can cost you plenty in additional taxes.

This Resource Report shows you how to protect yourself by structuring the loan properly and steering clear of any restrictions or prohibitions.

Other topics: Restrictions in corporate charter, bylaws, and third-party agreements, tax issues, cost basis, constructive distributions, loans from pension plans and affiliated businesses, intent to repay, and specific references to the relevant sections in the Internal Revenue Code.

#22: Money To and From Your Company: For Owners, Executives, and Family
Price: $39.00   |   Pages: 7

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Tom MartinThe Ideas of the Month are principally written by Thomas J. Martin, publisher and president, author, lecturer, consultant, investment banker, college professor, and founder of our publishing company in 1977. For 39 years, Tom has helped hundreds of businesses and individuals on many of the topics covered on this website. The Case Studies are actual, real-life examples of how businesses and individuals solved problems, took advantage of opportunities, and met big challenges. For subjects covered, please see Solutions (15 Critical Subject Areas) in the Menu Bar at the left side of this page. Enjoy and we look forward to reading your comments

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