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Financial Planning / Tax Strategies
|Subject: Re: private loan - details, details...||Date: 8/3/2004 7:02 PM|
|Author: TMFPMarti||Number: 72730 of 121598|
Let's suppose that in a moment of weakness, Lorenzo Sr. decides to loan $15,000 to his fine-looking son, Lorenzo Jr. This is NOT a gift, it's a loan. Terms are agreed to - say 4% for three years - a payment schedule is worked out, and everyone signs papers to that effect. And since this is "let's pretend," suppose further that, wonder of wonders, Lorenzo Jr. actually repays the loan.
I was a customer of the Bank of Mom & Dad and always got great service there.
You needn't be overly descriptive on Schedule B. Just "Lorenzo, Jr." as a source would suffice.
I don't know offhand whether Jr. would have a 1099-INT filing requirement, but I believe that's only required of those who accept interest-earning deposits in the ordinary course of their business. The 1099 instructions should clear that up. As far as Jr.'s business expense, your paperwork on the loan plus his proof of payments should be plenty.
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