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socrateaser, Lawyer
Category: Tax
Satisfied Customers: 38502
Experience:  Retired (mostly)
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Hi, If you get loan money from overseas over 100k+, do

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If you get loan money from overseas over 100k+, do you have to notify the IRS of this? Whats the best way to go about this as to avoid penalties?


if the money you receive is a loan (i.e., the provision of money in exchange for an obligation to repay based upon commercially reasonable terms), then there is no IRS reporting requirement. If the loan is a disguised gift, however, because you do not really have to repay it to the lender, and the amount of the gift is more than $100,000, then you must report the transfer on IRS Form 3520.

Hope this helps.
Customer: replied 3 years ago.

So, how do I prove its a loan? Do I have to show repayment with interest in a certain time period? How long do I have to repay the loan by IRS standards and what do I have to do to satisfy their requirements that it is indeed a loan and not a disguised gift?

IRS auditors generally accept documentary evidence as proof of a transaction. A loan that has a promissory note with a specific term of repayment (e.g., $100,000, payable to the lender on the first of each month in the amount of $877.71, with interest of 5% per annum for 360 months), along with evidence that you are actually making the monthly payments, would prove that a loan was actually made.

Hope this helps.
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