Hello to all viewing this post, I have a question about loans, taxes and the L.L.C. If the L.L.C. repays a loan to a member of the L.L.C., can this reduce taxable income?
An L.L.C. has two members. Member A loans the amount of $10,000 to the L.L.C at an interest rate of 12%. The members agree to split the profits 50/50. If the company makes a $50,000 profit upon the sale of an investment property and the company decides to repay Member A the amount of $10,000 at 12% interest, will the members be taxed on:
- the amount of $25,000 paid to each member
- the amount of $19,400 paid to each member (the amount remaining after Member A receives his $10,000 at 12% interest)