Question: Brad is the president of the Yellow Corporation He and
Brad is the president of the Yellow Corporation. He and other members of his family control the corporation. Brad has a temporary need for $50,000, and the corporation has excess cash. He could borrow the money from a bank at 9%, and Yellow is earning 6% on its temporary investments. Yellow has made loans to other employees on several occasions. Therefore, Brad is considering borrowing $50,000 from the corporation. He will repay the loan principal in two years plus interest at 5%. Identify the relevant tax issues for Brad and Yellow Corporation.
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