Schedule K-1 Used Loan Proceeds to Contribute Capital
S Corporation Schedule K-1 used loan proceeds to buy an interest in, or contribute to the capital of, this corporation. I/we took out loans personally then took those proceeds and loaned them to the business to secure equipment. Loans are documented/secured with promissory notes that detail the equipment VIN numbers. Are we allowed to deduct the interest expenses we incur on those funds as the business made payments to us and the vast majority of the payment is then put towards the regular payments on the personal loans? How would that be documented if allowed? The tax software I am using gives instructions on how that could be entered but it is not very clear.
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