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David formed a new corporation by investing $200,000 in cash. Following the advice of his...

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Accounting

David formed a new corporation by investing $200,000 in cash. Following the advice of his tax consultant, David designated $120,000 to be used for the purchase of corporate stock in 80,000 dollars as a loan to the corporation. What tax advantage does this arrangement have over structuring the entire investment as a purchase of stock? Explain.

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