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| Boone & Crockett - 1/27/2024 08:13 Unless you are borrowing the money in the farm account and writing a check from the farm account for the boat how are they going to prove that is what the money was borrowed for?
In most cases it would work like this, farmer borrows money on his Corp LOC then writes a check from his corp to his personal account. Then uses the money from his personal account to buy the boat. In which case, the money is borrowed from the Corp LOC did not buy the boat, it paid wages or a distribution to the owner. Both of which are completely legal to deduct interest for.
Basically it goes back to the old saying that "nothing is paid for until its all paid for".
Now, if you borrowed money for the boat and are writing the check to Al's Boat Emporium out of the Corp checking account, you probably better have consulted your CPA and have your ducks in a row.
If the money is borrowed against the Corp LOC and is paid to the personal account as payroll or a distribution, that is where the money trail starts and ends as far as it being a business expense.
What you do with the money after it is in your personal account would not matter. Its not any different for yourself or an other employee. You can borrow money to do payroll.
If you're running everything through one checking account (no business corp set up, just using a personal checking account for the farm) I could see things possibly getting sticky in an audit. | |
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Save on operating interest or invest in mutual funds?
