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Thanks again. A couple of other questions. Can the interest (for year one)owed on the loan be rolled into the loan and ultimately be paid off in a future year through a gift?

If so, as before, would the lender still be required to report interest income and/or the borrower have an investment interest expense in the current tax year? Or would the loan (through the gifts) being eventually satisfied with nothing having to be reported from the perspective of income and interest (obviously record keeping would be a must)?

If not, I assume that the $10,000 gift used for loan repayment would have to be separated into principle and interest with the appropriate income and expense being reported on the individuals' 1040?

All of your responses have been most helpful!!
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