Q: How are the loans to an owner taxed personally? Is it when the loan is taken or is it when it is converted to distribution later on?
A: There is no tax on either loans or distributions to owners or partners. Distributions are especially interesting. They are tax-free to the recipient.
In addition, they are not a tax-deductible expense for the company that makes the distribution. In effect, distributions fall outside of the income tax arena.
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