question about loans

[Patryk_Rebisz]

lets say family member loans you $10k for your film. The money goes into your company's bank account, you buy stuff related to the film with that money, get receipts, declare all the expenses = your company doesn't have to pay tax on it. However one day you repay that $10k to your family member. Would he have to pay tax on that $10k?

 

[OldCorpse]

I'm not an accountant, but it is my understanding, that if there is no interest involved, they don't pay taxes - if they charged you interest, then they'd have to pay taxes on the interest; this is assuming they didn't do something funny like declared the loan lost and took some kind of tax write-off on etc.. However, there is no rhyme or logic to most tax issues, so you'd be wise to consult with a professional - and I am definitely NOT a professional... it's just that I've been in that situation, and that's how I treated it, as a no-interest loan being repaid, and so I paid no taxes on it... but I prepare my own taxes, so I might be wrong; I've been audited by the IRS once, and given a clean bill of health, but that doesn't mean I know all there is to know about taxes. Plus, depending on the jurisdiction, there may be tax issues on a state, county or municipal level, which can be different in different places. Bottom line - from a federal tax code point of view, I don't think there's any tax involved, local taxes - somebody familiar with your jurisdiction would know. This is where an accountant comes in handy.

 

[October Black]

You can gift up to $13,000 per year and not report it. Everyone in the U.S. has a Lifetime tax free gift limit of $5,250,000.