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    da12ho2's Avatar
    da12ho2 Posts: 1, Reputation: 1
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    #1

    Jun 28, 2007, 10:55 AM
    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:
    delite's Avatar
    delite Posts: 202, Reputation: 3
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    #2

    Jun 29, 2007, 10:51 AM
    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.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #3

    Jun 29, 2007, 01:10 PM
    Well said, Delite.
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