USA Below-Market Loans

[nathanielhatten]

I have loan of $500k from a firm to one of the firms officers. The loan is a zero interest loan to be repaid in ten years. All my research merely returns references to "below market loans" as it relates to the tax accounting. Is the financial statement treatment any difference than a regular receivable, or would the aforementioned "below market loan" accounting apply?

Thanks,
Nathaniel

 

[kirby]

There is an economic cost to the firm for making this loan and it needs to be recorded for financial accounting books as well as tax books. So imputed interest must be calculated and recorded following the below market concept.
And for taxes if the firm has interest expense then you need to include the same amount on the borrowers w2 as income.