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R. Klein, EA
R. Klein, EA, Enrolled Agent
Category: Tax
Satisfied Customers: 3375
Experience:  Over 20 Years experience
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Last year I loand my company 150,000 to purchase assets. When

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Last year I loand my company 150,000 to purchase assets. When The company starts paying me back do I have to pay taxes on that money. Also, I was not able to pay myself for the entire year and was told that if I were to form a loan document stating that I was loaning my time to the corporation that I would not have to pay income tax on that money. Is this true?

Randalltax :

Making a loan to a company is not a taxable event.


Randalltax :

Receiving payment on the loan for the payment of PRINCIPAL is NOT a taxable event. However, for a loan to be valid, the borrower must pay some interest.

Randalltax :

The interest amount is deductible as an ordinary expense by the borrower and is included in income of the lender.


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