The company I work for is considering giving me a loan so I can buy into the company and become an owner and they say that the minimum interest rate they must charge me is the prime rate. I've never heard of this and am counter offering with a rate of 4%. Just wanted to know if there were any tax laws that says they have to charge me prime rate. I couldn't find any answer on the net.
2006-07-10 09:03:45 · 4 answers · asked by jfahd 4 in Business & Finance ➔ Corporations
While SOX can apply to loans to highly-compensated executives at large corporations, it probably doens't apply to your situation to any degree that matters. However, from a GAAP perspective what they are saying about prime rate is accurate. The company can make the loan, but if you get a rate much more favorable than the average, the company is then giving something of value to you and you are recieving it - creating a taxable exchange that has to be accounted for somewhere along the way. So, it's common to get a slightly more favorable rate but not one that is grossly so.
2006-07-10 15:30:40 · answer #1 · answered by pismocrab 3 · 1⤊ 0⤋
Depends on what country / state you live in.
In the US, the Sares-Oxley law regulates some aspects of company - employee loans - for publicly traded companies.
For private companies, or in other jurisdictions, check with your lawyer as the other answers said.
2006-07-10 09:48:45 · answer #2 · answered by jrlatmit 3 · 0⤊ 0⤋
I am surprised that they haven't withdrawn the offer. In my opinion, Loans to employees/prospective Partners should be avoided. They should let you raise your own funds and see what rate you would pay!!
2006-07-10 09:10:52 · answer #3 · answered by fatsausage 7 · 0⤊ 0⤋
This is an excellent question -----
For your lawyer to answer!
Yahoo Answers is the worst place to go for legal advice. People here will intentionally lie to you. "But your honor, this guy on Yahoo Answers said...."
2006-07-10 09:08:05 · answer #4 · answered by davidmi711 7 · 0⤊ 0⤋