Interest-Free Loans from Corporations to Shareholders: A Reconsideration of the Dean Rule
Article Abstract:
The Internal Revenue Service (IRS) continues to challenge the Dean rule and tax interest-free loans made from corporations to shareholders. The following key law cases are examined: Dean vs. Commissioner, and Hardee vs. United States, Greenspun vs. Commissioner, and Zager vs. Commissioner. The special fact in the Dean case is that the Tax Court held that an interest-free loan results in no taxable gain to the borrower. In Hardee, it was held that interest-free loans were outside the realm of taxable income. The Dean rule does not give tax-free status to all interest-free loans. The study concludes with a caution to taxpayers who hold large amounts of tax-exempt issues or large amounts of investment interest expense. In such cases, taxpayers should not engage in interest-free loaning because they could face possible litigation.
Publication Name: Tax Executive
Subject: Business, general
ISSN: 0040-0025
Year: 1984
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Is 1984 the Year to Go Subchapter S?
Article Abstract:
Pros and cons regarding Subchapter S corporations are described. Under Subchapter S, a corporation does not pay corporate income tax. Instead, profits and losses are reported by the stockholders. This technique is only disadvantageous to corporations and stockholders in high tax brackets. Details on the benefits and the disadvantages are included. Requirements for Subchapter S status are listed. Considerations concerning research and development are noted.
Publication Name: The Business Owner
Subject: Business, general
ISSN: 0190-4914
Year: 1984
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EU appears conciliatory on trade sanctions against US
Article Abstract:
The European Union plans to wait for the US to exhaust appeals at the World Trade Organization before imposing trade sanctions. Foreign sales corporation tax rules could be subsidies.
Publication Name: North American Free Trade & Investment Report
Subject: Business, general
ISSN:
Year: 2001
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