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-   -   Impact on business with the use of debt vs. Equity (https://www.askmehelpdesk.com/showthread.php?t=105093)

  • Jun 28, 2007, 10:55 AM
    da12ho2
    Impact on business with the use of debt vs. equity
    :confused: Explain how the federal income tax structure impacts a business decision to finance with use of debt vs. equity. :confused:
  • Jun 29, 2007, 10:51 AM
    delite
    Quote:
    Originally Posted by da12ho2
    :confused: Explain how the federal income tax structure impacts a business decision to finance with use of debt vs. equity. :confused:
    If the debt exceeds an acceptable ratio as oultined in IRS regs. Excess debt can be converted by the IRS to contribution of capital. Result is dental of a deduction for the interest on debt. Rule of thumb for debt:capital is 3:1.
  • Jun 29, 2007, 01:10 PM
    AtlantaTaxExpert
    Well said, Delite.

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