S-Corp Loan to LLC

[Taxman]

I have a client that is an S-Corp and loaned money to a new LLC so the LLC could buy a building. The owner of the S-Corp is a partner in the LLC. Is there anything I should be aware of. Does the S-Corp have to make sure the loan is properly documented and collecting interest at a reasonable rate of interest? I want to make sure I avoid any pitfalls. Any help would be appreciated. Thanks

[OldJack]

Yes, The S-corp should have proper documentation of the loan with all members of the LLC signing the note and payment schedule. Hopefully they will not consider this as the S-corp having ownership of the LLC.