thin corporation
thin corporation
A corporation with large debts to its shareholders and very little equity.In such a situation,the IRS may reclassify the debt as equity investment,meaning payments to shareholders do not include tax-deductible interest but are, instead, dividend payments. Thinly capitalized corporations are used for a variety of sophisticated tax planning vehicles.
The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.