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S Corporation Shareholders And Entity-Level Indebtedness: Is A Shareholder Ever Allowed To Deduct Losses Against Entity-Level Indebtedness?, Sumner E. Copple Iii

Akron Tax Journal

The owner of a closely-held business does not generally consider the tax implications when it is necessary to obtain financing for his business. A loan is negotiated and the borrowed funds are put to use by the business. However, in the case of a third-party loan to an S corporation,' different tax consequences may greet taxpayers conducting business as an S corporation, depending on the form of the loan transaction. Business owners adopting the S corporation form of doing business may discover that operating losses of the entity cannot be deducted due to the form of loan transactions between their …