6. Stock in Rylie Corporation is held equally by Emily, Louise, and John. Rylie seeks additional...

 

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6. Stock in Rylie Corporation is held equally by Emily, Louise, and John. Rylie seeks additional capital to buy a valuable tract of land that will cost $6,000,000. Emily, Louise, and John propose to loan Rylie $2,000,000 each, taking from Rylie a $2,000,000 10-year note with interest payable annually at five points above the prime rate. Rylie Corporation has current taxable income of $7,000,000. How are the payments on the notes treated for tax purposes? (Hint you do NOT need to know the prime rate to solve). 6. Stock in Rylie Corporation is held equally by Emily, Louise, and John. Rylie seeks additional capital to buy a valuable tract of land that will cost $6,000,000. Emily, Louise, and John propose to loan Rylie $2,000,000 each, taking from Rylie a $2,000,000 10-year note with interest payable annually at five points above the prime rate. Rylie Corporation has current taxable income of $7,000,000. How are the payments on the notes treated for tax purposes? (Hint you do NOT need to know the prime rate to solve).

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Tax Treatment of Loan Payments for Rylie Corporation Heres how the payments on the notes would be t... View the full answer