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I have been asked by a family member to hold an amount of money, less than $10K. I say, "hold" because it is not technically a loan. This person is in an awkward domestic situation, no assets are in this person's name, and if the situation deteriorates, the amount is the person's safety net. So...short-term, I put it in CDs. What is the tax status of this money? I'm assuming that for IRS purposes, it was a gift, not a loan, and that I am responsible for declaring any interest income. Must I declare the gift itself as unearned income? regular income? not at all?

Complication: On direction of the aforementioned person, I "loaned" a portion of the money ($1500) to another family member for closing costs on a new house. The debtor mailed me a letter detailing terms and interest (18 months, slightly less than CD rate). Does this qualify as "documenting the loan" for tax purposes? Do I include the interest as unearned income (or is there some lower limit)?

I'm afraid to ask this question of the IRS, so any advice or direction anyone can provide is greatly appreciated.
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