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03 - Accounting & Taxes Accounting Help & Tax Strategies

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Old 02-20-2009, 12:14 PM
csr01 csr01 is offline
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Join Date: Sep 2005
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Default Should I make down payment for machine a loan to S corp?

We are an S corp. We are going to purchase a machine for $50,000. The bank will loan us $42,000. We need to put $8,000 down. What is the best way to handle this transactions tax wise?

Should I make the $8,000 a loan from the shareholders?
I have money that is ready for distributions. This is the money I will use for the down payment. Can I get the cashier's check for the company right out of the S corp bank account and call it a distribution on the books?
What are the advantages of making this a loan?
Are there any other choices?
When it is time to file taxes, if the S corp pays the shareholders back this year. It isn't a write off anyway, right? Only the depreciation of the machine. Of course we only make about $5000 a month profit, I didn't want to show negative amounts on any months. I guess that is the advantage of making the loan on the books. Disadvantage is that our ratios look worse with more debt. Any other choices besides loan?
Do I have to charge interest on the loan?? $8,000
Thanks for the help
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