Loaning Equities to a C Corporation

[separate899]

I am interested in loaning equities I personally hold to a C Corporation. Dividends paid on those equities will be kept by the C Corporation. And the loan will be no longer than 6 to 9 months. Do I still need charge the C Corporation interest for this kind of loan?

[Mike9241]

what business purpose does this serve? who owns the C-corp?  I don't know how you could  loan them, so the corp could use them any purpose, without transferring title, in which case I'm sure the IRS would take the position that you sold them, requiring you to recognize gain (but not losses if the corp is a related party). Not only would you create tax issues for yourself but possibly for the C-Corp. 

if title is not transferred, you still own them. the iRS and 1099 tax reporting would say it is you who needs to report the dividend income. there could be other tax consequences as well for both you and the corp.

don't know what you are trying to accomplish but a discussion with a tax pro would be in order 

[M-MTax]

I agree with @Mike9241; this will create issue for you particularly if the corporation is closely held.

Even if not, the equities will continue to be owned by you and, hence, you will have federal income tax liability for receipt of the dividends. You could then transfer the dividends to the C corp but that only creates another issue.

If the objective is for the corporation to take advantage of the dividends received deduction (DRD), that won't work in the given scenario. Otherwise, if there is a tax avoidance intent, that will again create issues with the IRS.

Speak with a local tax pro.