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[ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] Re: If you can find such sellers... Posted by Dawn on June 11, 2009 at 5:15 AM In Reply to: If you can find such sellers... posted by CC in OC on June 07, 2009 at 6:48 PM Extracted from IRS Publication 550. "Limit on forgone interest for gift loans of $100,000 or less. For gift loans between individuals, if the outstanding loans between the lender and borrower total $100,000 or less, the forgone interest to be included in income by the lender and deducted by the borrower is limited to the amount of the borrower's net investment income for the year. If the borrower's net investment income is $1,000 or less, it is treated as zero. This limit does not apply to a loan if the avoidance of federal tax is one of the main purposes of the interest arrangement. " "Exception for loans of $10,000 or less. The rules for below-market loans do not apply to any day on which the total outstanding amount of loans between the borrower and lender is $10,000 or less. This exception applies only to: Gift loans between individuals if the gift loan is not directly used to buy or carry income-producing assets, and Pay-related loans or corporation-shareholder loans if the avoidance of federal tax is not a principal purpose of the interest arrangement. This exception does not apply to a term loan described in (2) above that previously has been subject to the below-market loan rules. Those rules will continue to apply even if the outstanding balance is reduced to $10,000 or less. " Seems to me that the IRS would want their piece of the potential interest income. : ...by all means, sign 'em up! It wouldn't even occur to me to ask a seller to accept no interest and then a discount in the future, but if you can accomplish this routinely, you're more silver of tongue than me. Follow Ups: Post a Followup: Name : E-Mail : Subject : Comments: : Extracted from IRS Publication 550. "Limit on forgone interest for gift loans of $100,000 or less. For gift loans between individuals, if the outstanding loans between the lender and borrower total $100,000 or less, the forgone interest to be included in income by the lender and deducted by the borrower is limited to the amount of the borrower's net investment income for the year. If the borrower's net investment income is $1,000 or less, it is treated as zero. This limit does not apply to a loan if the avoidance of federal tax is one of the main purposes of the interest arrangement. " "Exception for loans of $10,000 or less. The rules for below-market loans do not apply to any day on which the total outstanding amount of loans between the borrower and lender is $10,000 or less. This exception applies only to: Gift loans between individuals if the gift loan is not directly used to buy or carry income-producing assets, and : Pay-related loans or corporation-shareholder loans if the avoidance of federal tax is not a principal purpose of the interest arrangement. : This exception does not apply to a term loan described in (2) above that previously has been subject to the below-market loan rules. Those rules will continue to apply even if the outstanding balance is reduced to $10,000 or less. " : : Seems to me that the IRS would want their piece of the potential : interest income. : : ...by all means, sign 'em up! It wouldn't even occur to me to ask a seller to accept no interest and then a discount in the future, but if you can accomplish this routinely, you're more silver of tongue than me. [ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] WWWAdmin 2.0a © 1997 Matt Wright and DBasics Software Company, All Rights Reserved

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