Stock in jaybird corporation

Reference no: EM13193566

Stock in Jaybird Corporation ( 555 Industry Lane, Pueblo, CO 81001) is held COMMUNI CAT IONS equally by Vera, Wade, and Wes. Jaybird seeks additional capital in the amount of $ 900,000 to construct a building. Vera, Wade, and Wes each propose to lend Jaybird Corporation $ 300,000, taking from Jaybird a $ 300,000 four- year note with interest payable annually at two points below the prime rate. Jaybird Corporation has current taxable income of $ 2 million. You represent Jaybird Corporation. Jaybird's president, Steve Ferguson, asks you how the payments on the notes might be treated for tax purposes. Prepare a letter to Ferguson and a memo to your tax files where you document your conclusions.

Reference no: EM13193566

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