LO.5 In determining whether debt of a corporation should be reclassified as stock, comment on the relevance
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LO.5 In determining whether debt of a corporation should be reclassified as stock, comment on the relevance of the following:
a. The loan is on open account.
b. The loan is payable on demand.
c. The corporation does not make timely repayments.
d. Payments are contingent on earnings.
e. The loans are in the same proportion as the shareholdings, and the corporation uses the funds to purchase a new building.
f. The corporation’s debt-equity ratio is 5:1.
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Related Book For 
South Western Federal Taxation 2013 Corporations Partnerships Estates And Trusts
ISBN: 9781133495574
36th Edition
Authors: William H. Hoffman, William A. Raabe, James E. Smith, David M. Maloney
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