S Corp Business deductions for Real Property / Investing?, please help!

[Mark Updegraff]

Hello & Thanks to the BP Community! You guys are truly the BEST!

I don't see why this would be an issue, but I'll throw it out before calling my CPA tomorrow.

If an S-Corp has an excess of capital that it would like to avoid being taxed on can it invest it with a Real Estate Investment LLC and deduct the expense? Then the tax would only be on the interest produced from the investment.

What do non real estate businesses that have a surplus of capital usually do with it?

Thanks in advance!
MC

[Account Closed]

If your S-corp used excess capital to invest in a Real Estate Investment LLC this would be considered an investment. How you hold the investment will determine how gains and losses from the investment will be treated. The other consideration is how much of this entity is owned by the corporation.

Most of the time businesses with excess cash look to park this money in short term safe investments that are fairly liquid. It all depends on the needs and goals of the business. Usually businesses with a surplus will still have periods when they find they need to draw on that surplus for their working capital.