I start an S Corp in January and borrow 1 million dollars. By the end of the year I manage to make 1 million dollars and repay the loan pocketing zero dollars. How much tax do I have to pay this year?
Key information from the comments:
Q: if you used the $1 million you made to repay the loan, what happened to the $1 million you got from the loan itself? You still have that money (or assets you bought with it), right?
A: I spent the money on salaries. No assets accumulated. Next year I may have to borrow money again