Robert Underhood is the sole shareholder of Wealth Creation Inc. He has retired and moved to Florida,
Question:
Robert Underhood is the sole shareholder of Wealth Creation Inc. He has retired and moved to Florida, leaving management of the company in the capable hands of employees. Robert is currently building a new house in Florida. He has decided to borrow $894,000 from Wealth Creation Inc. to help finance this new house. In December of 2020, Robert borrows the $894,000 and signs a bona fide note to repay the funds in equal instalments over the next five years, starting in December of 2021. The loan is interest-free. The prescribed interest rate for 2020 and the next 5 years is 3.5%. What are the tax consequences to Robert and to Wealth Creation Inc. for the year 2020 and for the following five years?
Business Law Text and Cases
ISBN: 978-1337374491
14th edition
Authors: Kenneth W. Clarkson, Roger Miller, Frank B. Cross