Minnesota Couple Owes Income Tax on ‘Loans’ From Their Company

The Minnesota Commissioner of Revenue was right to reclassify loans a high-end residential general contracting business paid to its president and CEO as taxable shareholder distributions, the state tax court ruled.

Deandra and Timothy Purcell owe more than $80,000 in taxes, penalty, and interest for 2019 and 2020 on the nearly $600,000 in distributions Purcell Quality Inc. made to Timothy Purcell, the Minnesota Tax Court ruled April 24. “We agree with the Commissioner that the historical facts fail to demonstrate the arrangement the Purcells created established a true debtor-creditor relationship,” Judge Jane N. Bowman wrote.

• The Purcells argued that the ...