The U.S. IRS has released an international practice unit on Valid Shareholder Debt Owed by S Corporation. The practice unit addresses what qualifies as bona fide debt and whether that debt is owed directly to the shareholder creating debt basis with respect to whether a loan increases a shareholder’s debt basis.
International practice units are developed by the Large Business and International Division of the IRS to provide staff with explanations of general international tax concepts as well as information about specific transaction types. They are not an official pronouncement of law and cannot be used, cited, or relied upon as such.
Click the following link for the International Practice Units page on the IRS website.
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