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VICKKIE MILLER BOOKKEEPER

Intercompany loans between Corp & LLC

Asked on Oct. 3, 2014

I have a client that is wanting to loan money from his Corp to his LLC. Does this have to be an interest bearing loan? What would the tax implications be on this transaction? Both companies are US based.

Answers

Patrick Dunne Chief Financial Officer • October 2, 2014

Do they file one tax return? If they do and both of these entities are in the US, it wouldn't matter. If the loan crossed country borders, you should be charging interest and it should be documented, unless the intent is essentially an equity infusion. If there are separate entities, this should be documented and interest should be charged on an arms length basis.

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