TABLE OF CONTENTS

• Introduction vii
• Chapter 1
  • Constructive Dividend Versus Bona Fide Debt 1-1
  • Bona Fide Debt Vs. Non Bona Fide Debt 1-1
  • In General 1-1
  • Key Determinative Factors 1-1
  • Taxpayer May be Held to its Reporting Position 1-5
  • Equitable Estoppel & Duty of Consistency 1-5
  • Reasonable Compensation Considerations (S Corporations) 1-6
  • Non Bona Fide Debt 1-7
  • S Corporations with Ample Accumulated Adjustments Account (AAA) 1-7
  • Forgiveness of Indebtedness 1-7
  • Distributions with Respect to Stock 1-7
  • Earnings and Profits Considerations 1-7
• Chapter 2
  • Bona Fide Debt (Mechanics of) 2-1
  • Below Market Loans 2-1
  • In General 2-1
  • Loans 2-1
  • Demand Loan Defined 2-2
  • Term Loan Defined 2-2
  • Applicable Federal Rates 2-3
  • Identification 2-3
  • Identifying a Below-Market Demand Loan 2-3
  • Identifying a Below-Market Term Loan 2-5
  • Exceptions 2-6
  • De Minimis Exception 2-6
  • Other Exceptions 2-6
  • Computations 2-8
  • Computation of Forgone Interest in a Below-Market Demand Loan 2-8
  • Balance Outstanding for the Entire Year 2-8
  • Short Period Computations 2-9
  • Loans with Increasing Balances 2-10
  • Loans with Decreasing Balances 2- 10
  • The computation of the Imputed Transfer and Original Issue Discount In a Below-Market Term Loan 2-11
  • Interest Issues On Market Rate Loans 2-13
  • Demand Loans with Stated Interest at or above AFR 2-13 Market Rate Term Loans 2-13
  • Waiver or Cancellation of Interest 2-14
• APPENDIX A
  • BELOW-MARKET TERM LOAN EXAMPLE A-1
• APPENDIX B
  • BELOW-MARKET DEMAND LOAN EXAMPLE B-1
• APPENDIX C
  • KEY COURT CASES C-1