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Financial Planning / Tax Strategies


Subject:  Re: private loan - details, details... Date:  8/3/2004  11:46 PM
Author:  foo1bar Number:  72733 of 127753

Can I loan money to a family member and charge zero interest with an indefinite repayment period? Or is this kind of loan somehow a no-no since it can be used to get around gift taxes?

You can write the note as 6% interest (or whatever market is) and gift the interest payment. As long as you document that, I would think the IRS would have to agree it's valid.

IMO a 0% loan with no repayment time frame is either a gift of interest payments or a gift of principal... I'd rather make it explicitly one or the other, and document it so there is no question if the IRS asks me.

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