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Imputed Interest Shareholder to S corporation Loan

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    Imputed Interest Shareholder to S corporation Loan

    Imputed interest on 100% shareholder loan to S Corporation: I don't usually calculate this but have a new client where it has been in the past and figure I should continue.

    Rate used: Blended Annual AFR-is the blended annual AFR as low as it appears ie .28% in 2014, .45% in 2015? So on 100,000 I'd get $450 imputed interest?

    How to report:

    1120S: interest expense, add the accrued int to loan basis?

    1040 Interest Income

    Is this all correct?


    That is the way i have done it for years. I know there are lots of preparers who do not. I have always thought that if the amount is over $10,000 it should be done. There should be a note-the old theory was to try to segregate it from any chance of being a capital contribution. Again more seem not to do it.