This question has a number of issues:
- You indicate that the S corporation owns a mortgage
- Not sure the relevancy of this to the question; but see follow-up question below
- What is the business purpose of this S corporation
- You then indicate that you owner financed the sale of your home and transferred the note to the S corp
- How does this relate to the trade or business of the S corp
- How does this relate to the initial question
- An S corporation is a pass-through entity and the character of income, expense, etc. stays the same when it flows out to the shareholder(s)
- Not sure what you are attempting to accomplish
*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.
