Question: Teresa is considering contributing 900 000 to the capital of Beige
Teresa is considering contributing $900,000 to the capital of Beige, Inc., a C corporation. A business acquaintance suggests that, instead, she should invest only $600,000 in capital and lend the $300,000 balance to the corporation. The interest rate on the loan would be the Federal rate of 5.5%. Are there any tax benefits to this advice? Any tax pitfalls? Explain.
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