Interest on HELOC used solely for S-Corp

[juggy_jagadish]

I have a HELOC and the funds are used SOLELY for my S-Corp. It is not used for any personal or home improvement purposes. The HELOC is in my personal name. My S-Corp is not a real estate rental.

Can I deduct the interest on my S-Corp taxes? If not, can I deduct it on my personal taxes? Where? Any input or advice? TIA!

[AmeliesUncle]

How did it go from you to the corporation?

• Did you loan the money to the corporation?
• Did you contribute the money to the corporation?
• Did you use the money to buy stock of the corporation?

[juggy_jagadish]

It is shown as a Capital Contribution in the S-Corp books.

[AmeliesUncle · Accepted solution]

The deduction will be on your personal tax return.  I am uncertain of exactly where TurboTax asks it, but it should be in the section when you are entering the K-1.  There should be a question or a checkbox that asks about "Debt-Financed Acquisition", and that is where you enter the interest.

[juggy_jagadish]

Thank you. Only a very small portion of the HELOC balance was used as initial capital. The rest of the money was used for working capital of the S-Corp. Would the entire interest every year still be considered "Debt-Financed Acquisition"?

[AmeliesUncle]

Yes (at least based on my understanding of it).

[juggy_jagadish]

Thank you for your response 🙏