'The loan appears to have never existed': Watchdog sues Trump over mystery $50M 'hidden debt,'

[moniss]

16. You have to have

what's commonly referred to as a "better than arm's length" relationship regarding the transaction. For instance if you own two businesses and from one you only take $1 in pay and you have that business create a loan, zero interest and no repayment for 50 years, to you as owner of the other business in a large amount, say $1 million dollars, and you only claim a paycheck of $1 from that second business while you pay no taxes on the "loan" amount. Won't fly with the IRS. You are in control over both entities and all transactions.

If you had an independent board of directors for a publicly traded company could they legally approve a "loan" of some amount to a company officer? Yes under certain circumstances and there would still be the fiduciary responsibility to the stockholders to contend with. They would have to show the loan had a proper legal purpose and had no negative impact to the shareholders. That is a very general example and the details are what will always be the deciding factors as to legality/proper fiduciary conduct.

If you are a bunch of family members intertwined in various businesses etc. it gets really iffy about being able to have that "distance between interests and control" that it's all about.