What adjustment could be made to the s corps income

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Question: An S corporation is owned 50% by Individual A and 50% her son, Individual B. Individual A makes an interest-free loan to the corporation of $1,000,000. A market rate of interest on the loan would be 5%. In 2021 the S corporation has taxable income of 100,000. If the IRS could prove that the purpose of the interest-free loan was to allocate more income to B, what adjustment could be made to the S corp's income?

Reference no: EM133612288

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