In some cases, the IRS may reclassify a corporation's debt as equity (e.g., if it believes the corporation is merely trying to engage in earnings stripping). When is something truly debt, and not a capital contribution. The IRS says it is most likely debt when: 1. there is a written promise to pay on a certain date and a fixed, reasonable rate of interest 2. the debt is not subordinate to other liabilities 3. the debt is not convertible to stock 4. shareholders don't hold the exact same proportion of debt that they have in stock 5. the debt-to-equity ratio isn't excessive — Edspira is the creation of Michael McLaughlin, who went from teenage homelessness to a PhD. Edspira’s mission is to make a high-quality business education accessible to all people. — SUBSCRIBE FOR A FREE 53-PAGE GUIDE TO THE FINANCIAL STATEMENTS & OTHER FREE GUIDES * http://eepurl.com/dIaa5z — MICHAEL’S STORY * https://www.edspira.com/about/ — LISTEN TO THE SCHEME PODCAST * Apple Podcasts: https://podcasts.apple.com/us/podcast/scheme/id1522352725 * Spotify: https://open.spotify.com/show/4WaNTqVFxISHlgcSWNT1kc * Website: https://www.edspira.com/podcast-2/ — CONNECT WITH EDSPIRA * Website: https://www.edspira.com * Instagram: https://www.instagram.com/edspiradotcom * LinkedIn: https://www.linkedin.com/company/edspira * Facebook: https://www.facebook.com/Edspira * Reddit: https://www.reddit.com/r/edspira *TikTok: https://www.tiktok.com/@edspira — CONNECT WITH MICHAEL * LinkedIn: https://www.linkedin.com/in/prof-michael-mclaughlin * Twitter: https://www.twitter.com/Prof_McLaughlin * Instagram: https://www.instagram.com/prof_mclaughlin * Snapchat: https://www.snapchat.com/add/prof_mclaughlin *TikTok: https://www.tiktok.com/@prof_mclaughlin — HIRE MCLAUGHLIN CPA * Website: http://www.MichaelMcLaughlin.com/hire-me