Tom's Blog

Ada asks the following question about the tax effects of loans between an owner and their business:

Q: Could you tell me is a loan payback payment a deduction for a C-Corp so it will be excluded from the total income?

A: No, a loan repayment from a corporation to a shareholder is not a deduction. The reason is that when you loaned the money to the corporation, the corporation did not have to pay tax on it. So, when it is repaid, there is no deduction. The good news is that it is not income to you either.

Warmest regards,

Tom