Answers · Partnerships · Form 1065
Can a Partner Loan Money to a Partnership?
A bona fide partner loan is a partnership liability, separate from capital.
This question is answered in full on the main page for it.
How it works
The rule, and what it turns on.
Principal repayment reduces the liability; interest is separately accounted for and tax rules under §§707/163 can apply.
Example
Partner lends $100,000 under a note: debit Cash, credit Partner Loan Payable.
Common mistakes
What we see go wrong, and what we do instead.
- Treating loan as capital automatically.
- Deducting principal repayment.
A better approach
- Use written terms and reconcile partner loan balance.
Authority
Where this comes from, so you can check it.
IRC §§707, 752, 163 as applicable.
Educational information, not individualized tax advice. Treatment depends on your facts, entity classification and tax year, and IRS instructions change. Confirm your own position with us before relying on it. Mint Associates does not provide legal services.
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