1. Should I construct the loan as a mortgage or a regular loan? If this is a "signature" loan not based on a property it is considered a personal loan.
2. Where do I report the $5K income in my personal return? On the Sch B ... it is interest income.
3. Where do I report the $4K expense in my personal return? Nowhere ... personal interest is not deductible. The S-corp should have taken out the loan and you could have guaranteed it that is not how you have the current loan set up.
