Hey guys,
Been thinking about interest and when it can be deducted. I keep seeing “business purposes,” which seems like it can be defined pretty loosely. How liberal can we get with this, and is there any case law or guidance?
Example:
Is a partnership paying back a partner from his/her capital account using a loan considered a business purpose? Money’s fungible, is there a way to move/allocate the money or create a paper trail that can allow it to be deductible (without committing fraud, of course)? Does it matter the type of loan? Mortgage, Line of Credit, plain old Term Loan, etc.
Another Example:
Is equity stripping a piece of real estate a business purpose, or can it be made one?
If these things are acceptable for deducting the interest, is there anything that isn’t acceptable besides outright using the loan for personal expenses?
Thank you,
Logan