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If you make a loan to an employee that you don't expect to be repaid, you can deduct the amount as compensation. If you do expect the loan to be repaid, it would not be deductible unless and until the employee defaults.
If an employee has outstanding loans over $10,000 and you are not charging interest, or you are charging interest at a rate below the applicable federal rate, you may have to report "imputed interest" income at the federal rate, and also report this imputed interest as additional compensation to the employee.
You can find out the current applicable federal interest rate by calling the IRS at 1-800-TAX-1040. Consult your tax advisor for more information if you think this rule applies to you.