Debt Structure for stock purchase

Son buying stock in S corp from Father. Receiving outside financing. Outside lender will only loan funds to the S Corp (using the assets as collateral). They will not lend directly to the son for the purchase of the stock.

The suggestion of the lender is to record the bank note payable on the books of the corp, with a corresponding loan receivable from the son. The terms of the notes will mirror each other. There should be no impact on the S corp return for these notes.

Is it this simple, or am I missing something?

I wouldn't advise a loan receivable like you describe.
The way I've structured these is to have son purchase or be gifted a small percentage as step 1 (say 1%). Then, s-corp uses borrowed funds to redeem Dad's 99%.
This keep the entire transaction inside the corporation consistent with the s-corp being the borrower.
IMO, recording a loan receivable to son begs for a challenge as to whether that was a distribution to son. Plus, it creates the need to administer two loans instead of just one.
Son doesn't get outside basis in either instance.

I agree with CaptCook, but I think you can reverse the steps. Suppose son will finance 90% of the purchase. Step 1 can be a redemption of 90% of the father’s shares using the proceeds from the loan. Step 2 can be the son’s purchase of the father’s remaining shares.

Redemption of any portion of a 100% owner is a nothing for tax purposes.
Son needs to be an owner first (at some level) before Dad can be redeemed. Otherwise, it's just a debt financed distribution. I see what you're saying and maybe that's semantics on my part.

Redemption of any portion of a 100% owner is a nothing for tax purposes.
Son needs to be an owner first (at some level) before Dad can be redeemed. Otherwise, it's just a debt financed distribution. I see what you're saying and maybe that's semantics on my part.

The redemption should qualify for sale treatment under Zenz.

The loan by son strikes me as phony and thus it would be unethical to report it on a return you prepare.

The loan by son strikes me as phony and thus it would be unethical to report it on a return you prepare.

I disagree, there is nothing phony about a back-to-back loan so long as the second loan has the required indices of debt. But I see no need for it here…

Maybe I am misunderstanding what the "loan receivable" is. My comment was based on there being no money changing hands to support it. Please clarify for me.

Maybe I am misunderstanding what the "loan receivable" is. My comment was based on there being no money changing hands to support it. Please clarify for me.

I interpreted it as a loan by the lender to the S Corp and a loan by the S Corp to Son, the proceeds of which Son will use to buy shares from Father. Funds would actually move three times or twice (from lender to S Corp and from S Corp to Father directly, on behalf of Son).

That makes a lot more sense than what I had been thinking. (I'm blaming it on pot.) Thanks.

I don't understand the purpose of the loan to the son. It seems to be an unnecessary complication to what is a very simple transaction.

Captain Cook's approach in #2 is, in my opinion, the best and most correct approach.