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    kmello05's Avatar
    kmello05 Posts: 1, Reputation: 1
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    #1

    Jul 26, 2007, 03:15 PM
    Federal income tax structure
    How does the federal income tax structure impacts a business finance decision with the use of debt vs. equity?
    delite's Avatar
    delite Posts: 202, Reputation: 3
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    #2

    Jul 26, 2007, 05:26 PM
    Quote Originally Posted by kmello05
    How does the federal income tax structure impacts a business finance decision with the use of debt vs. equity?
    Interest on debt is deductible. If debt to capital ratio is considered to high by irs guidleines, usually more than 3:1, then debt is converted to capital and no deduction for interest is allowed.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #3

    Jul 27, 2007, 11:07 PM
    Agreed!
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