Shareholder loans

[Tami]

What applicable federal rate must a stockholder charge his 100% owned corporation for a stockholder loan?

[Roland Slugg]

Depends on the term. For a demand loan it's the 110% of AFR rate. For longer terms it's the 120% or 130% rate. The IRS issues monthly tables of the rates.

There are exceptions to the use of the AFR, most commonly a de minimis $10,000 exception, among others. See Code §7872(c)(2) et al.

[Tami]

Thank you for your assistance.