Can I loan someone $10,000 in California without the IRS stepping in?
I need to float $10,000 cash to a payroll account for the company Im employed at until our billing goes through. When Im repaid in cash the $10,000 will the IRS want it to be taxxed, even though it was my money and already taxxed when I earned it. The problem is I was told last minute so this will be a cash transaction, as they need the funds right away so the payroll checks dont bounce.
- StephenWeinsteinLv 71 month agoFavourite answer
If you are repaid, then the IRS will not even allow the $10,000 to be taxed.
1) You are required to pay tax on the "imputed interest", which is the mathematically calculated amount that the interest would have been if this had been a fair market rate loan and not an interest-free loan.
2) If the loan is not repaid, then the borrower will have to pay tax on the $10,000 that they received from you.
- ErikLv 71 month ago
I think so. That's not a huge amount of money to them.
- Pearl LLv 71 month ago
i would ask the irs about it