Below is information about CORPORATE LOANS TO OFFICERS from a variety of sources. Please take a look at the materials that our team has selected for you.
https://scholarship.law.wm.edu/facpubs/323/#:~:text=In%20most%20states%2C%20a%20corporation%20may%20loan%20money,requirement%20has%20proved%20to%20be%20an%20illusory%20standard.
https://www.jstor.org/stable/40683336
regulating loans to officers, directors or shareholders of business cor- porations. Such legislation must be regarded as the principal deterrent to a dissipation of corporate assets through loans to "insiders". Common Law Rule In the absence of statutory prohibition, a business corporation may lend its funds to directors, officers and shareholders.
https://www.lawinsider.com/clause/loans-to-officers
The corporation may lend money to, or guarantee any obligation of, or otherwise assist any officer or other employee of the corporation or of its subsidiaries, including any officer or employee who is a Director of the corporation or its subsidiaries, whenever, in the judgment of the Board of Directors, such loan, guarantee or assistance may reasonably be expected to benefit …
https://taxes.uslegal.com/articles/irs-treatment-of-loans-to-officershareholder/
Commissioner T.C. Memo 1993-444 (1993) conclusively held that the officer/shareholder bears the burden of demonstrating that amounts received from the corporation are indeed loan proceeds, rather than taxable compensation for services provided. The court outlined certain conditions beneficial for the taxpayer to demonstrate in order for the funds to be treated as a …
http://www.njmediator.com/newsletters/business-law/corporate-loans-to-directors-and-officers/index.html
Under the Act, a corporation generally cannot make a personal loan to an officer or a director unless the loan has been approved (or subsequently ratified) by a majority of the shareholders. If an approved loan is challenged, judicial review is often focused on whether the loan was fair overall to the corporation and its shareholders.
https://www.lawinsider.com/clause/loans-to-officers-and-directors
Loans to Officers and Directors. Neither the corporation, nor any of its directors or officers acting for and on its behalf, shall directly or indirectly make any advancement on account of services to be performed in the future or loan any of its funds , monies , capital or other property to any director or officer of the corporation .
https://www.dorsey.com/newsresources/publications/2002/08/sarbanesoxleys-new-ban-on-loans-to-directors-and__
SARBANES-OXLEY’S NEW BAN ON LOANS TO DIRECTORS AND EXECUTIVE OFFICERS: WHAT YOU NEED TO KNOW NOW. Effective July 30, 2002, Section 402 of the Sarbanes-Oxley Act of 2002 amended the Securities Exchange Act of 1934 to prohibit U.S. and foreign companies with securities traded in the United States from making, or arranging for …
https://www.sec.gov/education/smallbusiness/goingpublic/officersanddirectors
Loans to directors and officers Section 13(k) of the Exchange Act prohibits SEC reporting companies from making personal loans to their directors and officers. Loans made in the ordinary course of business at market rates by issuers that are financial institutions or in the business of consumer lending are excepted from the prohibition.
https://www.irs.gov/businesses/small-businesses-self-employed/s-corporation-employees-shareholders-and-corporate-officers
Purported “loans” from S corporation to its sole shareholder, officer, and director, were wages for purposes of FICA and FUTA taxes. The loans were unsecured demand notes bearing no interest, loans were made entirely at the discretion of shareholder, and the shareholder regularly performed substantial, valuable services for taxpayer.
https://www.irs.gov/businesses/small-businesses-self-employed/paying-yourself
A loan by a corporation to a corporate officer should include the characteristics of a loan made at arm's length. That is, there should be a contract with a stated interest rate, a specified length of time for repayment, and a consequence for failure to repay the loan. Collateral would also be an indication of a loan.
https://www.fundera.com/blog/giving-employee-a-loan
Loan amount: If you are going to offer employee loans, set aside a specific amount to be used in the loan program. Also determine exactly how much you will lend to employees. You may want this to be a fixed amount, or a percentage of the employee’s salary. Loan term: Generally, employee loans have shorter terms of two to three years max. This is because it …
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