Scenario: I took out a $100K personal loan at 4% and lent it to my LLC at 5% to purchase a rental property. My LLC is taxed as a S corp. So at the end of year, my LLC will pay $5K interest to me. I have $4K interest expense.
1. Should I construct the loan as a mortgage or a regular loan?
2. Where do I report the $5K income in my personal return?
3. Where do I report the $4K expense in my personal return?
