Making loans to your corporation became more hazardous 33 years ago with the Tax Reform Act of 1986. That was pretty awful.
But the new Tax Cuts and Jobs Act tax reform made things even worse for tax years 2018 through 2025. If you operate your business as a corporation, you need to know how the rules apply when you loan money to your corporation.
Imagine this: you loan $100,000 to your corporation.
The corporation goes bankrupt and has no money to pay you anything on your loan.
And now, the new tax law gives you a zero tax deduction for your $100,000 loan.
Yep! That’s the way it is.
If you think the corporation is going to fail, but, against your better judgment, you still want to make the loan, you need to do some planning around this.
When you need to consider making a loan to the corporation, we should absolutely discuss the issues. My direct line is 262-358-8297, and I’m at your service.
We're Here to Help
Get advice from our experienced network of financial managers.
If you Value our Blog, We have an ask.
We spend hours researching data to help you understand your finances and taxes, including historical context, issues, and solutions. Our goal is to empower people to improve their relationship with money. Please consider a $3 donation today.
Spencer Accounting Group, LLC does not provide investment, tax, legal, or retirement advice or recommendations in these blogs. The information presented here is not specific to any individual's personal circumstances.
Keana Spencer is an Accountant, Entrepreneur, and Educator to her clients, with a strong passion. Keana has over 10 years of experience and through her practice, she is a source of knowledge and strategies to her clients.