Paying Personal Expenses from a Business Bank Account?

That’s what one owner of an electrical contracting company did to make part of the mortgage payments on his personal residence. The Tax Court said the payments from his corporation’s bank account were dividends to him. If a corporation makes a noncompensatory payment on behalf of a shareholder without a business purpose or expectation of repayment, then this amount constitutes a constructive dividend to the shareholder (assuming the corporation has sufficient earnings). He could deduct the portion of the payments constituting mortgage interest as an itemized deduction.