Ms. Knox recently loaned $20,000 to her closely held corporation, which needed the money for working capital.

Question:

Ms. Knox recently loaned $20,000 to her closely held which needed the money for working capital. She sees no reason to document the loan other than as a “loan payable—shareholder” on the corporate balance sheet. She also sees no reason for her to pay interest on the loan. What advice can you offer Ms. Knox concerning this related-party transaction?
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...