Kooiker - 1/27/2024 08:22
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 they choose the forensic accounting route, it won’t be hard for them to follow the money trail, starting with the purchase agreement, then all the activity immediately thereafter. I’m not an accountant, but have enough common sense to come to the conclusion I’m not gonna be able to keep my deduction in this situation. Actually, the boat deal could possibly qualify under the second home irs rules, as IIRC, if you can sleep and relieve yourself on the boat through its design, it qualifies a second home. But that’s a whole separate set of circumstances than the banker has laid out.