{"id":1101,"date":"2018-06-25T16:04:55","date_gmt":"2018-06-25T22:04:55","guid":{"rendered":"http:\/\/blog.denverqbhelp.com\/?p=1101"},"modified":"2018-06-25T16:04:55","modified_gmt":"2018-06-25T22:04:55","slug":"audit-proof-your-shareholder-loan","status":"publish","type":"post","link":"https:\/\/www.oconnorcpafirm.com\/blog\/2018\/06\/audit-proof-your-shareholder-loan\/","title":{"rendered":"Audit-proof your shareholder loan"},"content":{"rendered":"<p>Business owners may face a lot of scrutiny if they borrow money from their company and then get audited. Find out how you can prepare.<\/p>\n<p>If you&#8217;re a business owner and your company lends you money, you&#8217;ll enter it in the books as a shareholder loan. However, if your return is audited, the IRS will scrutinize the loan to see whether it is really disguised wages or a dividend taxable to you as income.<\/p>\n<p>Knowing what the IRS might look at may be useful when you structure the arrangement. Here are some items that will be considered if you&#8217;re audited:<\/p>\n<ul>\n<li><strong>Your relationship with the business.<\/strong> First, the IRS will look at your relationship to the company. If you&#8217;re the sole shareholder with full control over earnings, that may weaken your case that the loan is genuine. On the other hand, if you&#8217;re one of several shareholders and none of the others received similar payments, that suggests it may be a genuine loan.<\/li>\n<li><strong>Loan details.<\/strong> The IRS will want to know all the details related to your loan. This may include whether or not you signed a formal promissory note, if you pledge any security against the loan and if the loan has a specific maturity date or a repayment schedule. Other questions may come up about the rate of interest you&#8217;re paying and if you missed any payments. The more businesslike the terms of the loan, the more it will appear to be a genuine debt.<\/li>\n<li><strong>Other financial details.<\/strong> In addition to loan specifics, the IRS may ask you if your company is paying you a salary that&#8217;s in line with the work you perform, and if the company pays dividends.<\/li>\n<\/ul>\n<p>Whether the IRS taxes you on the loan will depend on all these factors. If you&#8217;ve paid attention to the details, the loan should withstand IRS scrutiny. Contact us if you&#8217;d like more information about getting a loan from your business.<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Business owners may face a lot of scrutiny if they borrow money from their company and then get audited. Find out how you can prepare. If you&#8217;re a business owner and your company lends you money, you&#8217;ll enter it in the books as a shareholder loan. However, if your return is audited, the IRS will [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Audit-proof your shareholder loan - O&#039;Connor CPA Firm<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.oconnorcpafirm.com\/blog\/2018\/06\/audit-proof-your-shareholder-loan\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Audit-proof your shareholder loan - O&#039;Connor CPA Firm\" \/>\n<meta property=\"og:description\" content=\"Business owners may face a lot of scrutiny if they borrow money from their company and then get audited. 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