Hackitoff - thanks for the response!
I don't think the PHC would ever be an issue because interest income from loans would never come close to the C-Corp income from providing services to the S-Corp.
Also, as mentioned previously, I do plan on taking a salary from both entities.
I just am uncertain of any issues that arise when S-Corp gets 1099 income from one client, then pays C-Corp to provide the majority of the services (and therefore receives about 90% of S-Corp receipts/income/whatever).
And yes, I am aware that this structure is not optimal but it is what I have been dealt.
