Over the years my corporations loaned me money many times. It was a good deal for both the corporation and me.
Think about it. The corporation puts the money in the bank. The bank loans the corporate officer the money. The officer pays the bank 8 percent interest on the loan. If the company puts the money in the bank, the bank would pay the corporation 3 percent interest on the deposit.
In the other case the corporation loans the money to an officer of the company. The officer pays the company 8 percent. This way the company gets 8 percent rather than 3 percent on its money.
The problem is not the loan, it is the guys who don't pay the loans back.Bush borrowed the money at the going rate and paid it back. The Democrats and the media depend on people being ignorant. So ignorant that they can be made to believe that borrowing money and paying it back at the going interest rate is a crime.
The guys at Enron and several other companies borrowed money and never paid it back. Borrowing money at the going rate and paying it back on time is not considered a crime by anyone except the Democrats.
The law should be changed so corporations can not forgive loans made to officers. That is the scam. The officers of a companies get loans with no intention of paying it back to avoid income taxes. The company loans the officer money. The officer doesn't pay it back. The company forgives the loan. The officer beats the government out of the taxes. They should make it so they must sieze the officers assets if he does not pay the money back at the agreed interest.
Some of these Enron deals were loans that had in the agreement that the person getting the load never had to make payments, pay intererest or pay back the principle ...ever. A loan is not taxable income. It is a neat scam.
That is against the law if done in the USA.
I paid the corporations the going rate for interest and paid the interest and principle on time. The IRS never said a word. They will nail you if they catch you doing what the Enron guys did.
The Enron guys were trying to skirt the law by using off shore companies and overseas deals to try to skirt US LAW.
That is a long way from what Bush did.
If the agreement and the genuine intent (at the time of withdrawal) is that the loan be repaid, and there's persuasive evidence of both that intent AND the shareholder's ability to repay, then it's a loan. If not, it's a taxable dividend. Security or interest is not required. However, interest below the market rate is to be calculated and treated as a dividend.
For employees and others:
Basically, if debt is forgiven, that forgiven debt becomes income (unless debt is discharged in bankruptcy or if it's less than a debtor's insolvency). It's a risky area, especially if it's put into writing that the loan doesn't have to be repaid.