I've been curious to find out a little bit more information about the following hypothetical that I can't find out much information about online. This is most likely territory for tax experts only but I'm wondering if anybody on BP has ever tried to structure something along these lines:
Assume there is a closely held C-corporation that is doing relatively well and a shareholder would like to come up with money for a down payment on a multi-family property. Is it possible to have your own corporation loan you funds for that down payment? Assume you consult tax attorneys and come up with all the right paperwork to make it bona fide and avoid having the IRS classify it as dividends. I'm guessing it would be between the C corp and a newly incorporated LLC that would be working with a bank on getting a commercial loan to finance the remainder.
Has anybody on BP ever done something like this? If I'm interested in learning more about it are there any good resources online that explain it well? It seems like a good avenue to acquire funding if you get all your ducks in a row. I'm mostly curious to see what the BP community has to say about it though. Let me know your thoughts!
@Brandon Hall I wasn't thinking of it necessarily as a way of avoiding FICA but I suppose it would be if you don't have to pay yourself a salary or bonus and pay taxes on it in order to be able to use those funds for whatever you personally want. If a business has good cash flow and business credit it would be an advantageous option for accessing capital when needed (documented properly).
The only thing is I haven't heard much discussion about it on BP or elsewhere and wanted to get a sense of pros/cons and pitfalls, if there are any.