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Intercompany loan

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Intercompany loan
Loan made by one unit of a corporation to another unit of the same corporation.

Intercompany loan
A loan in which both the lender and the borrower are divisions of the same corporation. Such a loan may have tax consequences, depending on the jurisdiction.


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The regulations also address another area that the IRS felt was not being properly addressed in the past: intercompany loans and guarantees.
although the borrowing member cannot take an interest deduction, the lending member receives exempt interest income on the intercompany loan and can deduct interest paid to the third party; thus, there is no net interest expense disallowance on a consolidated basis, even though a consolidated borrowing supports the exempt investment).
In addition, reporting the highest intercompany loan balances during the year does not seem to serve any useful purpose.
 
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