A successful veterinarian was building up lots of money in the corporate checking account. This was great news of the business success.

However, because the money was inside the corporation, it couldn’t be taken out without getting taxed on it again. They wanted to invest that money into real estate for their personal finances, so they decided to borrow the money from the corporation.  

This is a great strategy, and it works. 

They knew they had to pay interest on the loan to the corporation, so they set the interest rate high, knowing that the corporation has a lower tax bracket.

They thought this would save them money.  That is logical thinking!

However, to get that interest back out of the corporation, they still have to pay tax on it!

So, by lowering the interest rate and putting less interest income into the corporation, they can save a lot of taxes over 10 years.