Debt or Equity Financing: What Is The Difference?
Author: Susan Harper
| CPE Credit: |
2 hours for CPAs
2 hours Federal Tax Related for EAs and OTRPs
2 hours Federal Tax Law for CTEC |
Choosing between debt and equity financing is one of the most critical decisions a business can make. Each option carries unique implications for tax strategy, control, risk, and long-term growth. This course dives deep into the advantages and disadvantages of both financing methods, helping you understand how these choices impact your organization’s financial health and compliance.
Join Susan Harper, a seasoned expert with over 25 years of experience in CPE instruction and IRS auditing, as she breaks down the key factors influencing financing decisions. You’ll also explore IRC Section 385, which empowers the Treasury to classify corporate interests as debt or equity—a crucial consideration for tax professionals and advisors.
By the end of this course, you’ll have actionable insights to guide clients or your organization in making informed, strategic financing decisions. Don’t miss this opportunity to strengthen your expertise and stay ahead in today’s complex financial landscape.
Per the IRS Education Provider Standards this course must be COMPLETED by 12/31/2028 to receive credits. NOTE: Go to My Professional Profile in your CCH CPELink account settings to ensure your name, and PTIN number; matches your PTIN cardPublication Date: January 2026
Topics Covered
- Debt vs. Equity Financing: Key Differences
- Pros and cons to both Debt and Equity Financing
- Factors to Consider when Making the Debt vs. Equity Financing
- Factors to Determine if Debt Exists
- Impact of IRC Section 385 on Classification
Learning Objectives
- Identify the fundamental differences between debt and equity financing
- Evaluate the pros and cons of debt financing for various business scenarios
- Assess the advantages and disadvantages of equity financing
- Apply key factors to determine if a debt exists under current regulations
- Interpret IRC Section 385 and its impact on classifying corporate interests
Level
Intermediate
Instructional Method
Self-Study
NASBA Field of Study
Taxes (2 hours)
Program Prerequisites
Basic understanding of debt and/or equity.
Advance Preparation
None
