Treatment of Interest


V

vegafamily

All,

I need help deciding how to treat interest in the following scenario:

1. 100% Shareholder S-Corporation takes out a $56,000 Home
Equity loan. 9.75 interest rate with a payment of ~597

2. Shareholder lends 51,500 to s-corporation and sets the
loan with an interest rate that will cover the whole 597
payment.

3. s-corp pays the 597 every month directly to the bank.

Does the shareholder deducts the Home Equity loan interest
in his itemize deductions as mortgage interest?

Also,

4. Shareholder combines first mortgage with home equity loan
into a new loan a year after.

5. s-corp now pays directly to shareholder.

How is interest deducted now?

Thank you very much. All your answers are greatly appreciated!
 
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