Tax Reduction Letter - Are Corporate Advances to the Owner Loans, Dividends, or Salary?

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Article Date:

August 2023

Word Count:

475

Are Corporate Advances to the Owner Loans, Dividends, or Salary?

If you operate your business as a C or an S corporation and if you loan money to the corporation or the corporation loans money to you, you need documentation that the loan is a loan.

With the S corporation, the loan that fails as a loan can result in taxable wages to you.1

With the C corporation, the loan that fails as a loan can result in taxable dividends to the shareholder.

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