Borrowing your LLC

[Boma Osime]

Can an individual owner of an LLC, borrow a large sum of money to it's LLC and set up a note payable agreement between the LLC and it's owner. Interest payable would be paid to the owner who would in turn pay taxes on the interest. A client is thinking of loaning it's LLC some money to pay off it's mortgage loan and then the LLC now pays the monthly mortgage plus interest to the owner. Does an owner need a license for this? I am aware that 2 companies can do that but not very sure when it comes to an individual owner and it's LLC. Can someone let me know if this is possible? Thank you

[BOB W]

Not sure what you client is trying to accomplish here, other than reducing SS tax? Will there be a business purpose for this transaction? May be just pay off original mortgage?

[spanel]

What is the owner trying to accomplish with this? Moving a personal loan to a business to try to write off said interest? Then pick it up as income on the personal side?

Chris

[Boma Osime]

The owner says rather than pay the high interest rates to the bank he'll rather pay it to himself and have the advantage of claiming the interest deduction. However my question is still not answered if anyone has knowledge of this please help can this be done by an owner of an LLC. Question is above?

[BOB W]

I know of no restriction in lending money to your LLC, single member or not.

[Boma Osime]

Thank you!

[BOB W]

Is this transaction to pay off his personal mortgage on his home? If so, there is no business purpose to deduct the interest on the LLC. Personal schedule A deduction to Schedule C deduction? I think NOT.