Tax Question: Should I have my parent loan
this money to me directly (me, the person) or should I have them loan it to my business, the LLC?
Generally - that would not matter if the money are loaned directly to the business or you p[er4sonally take a loan and use funds for business. Because part of the loan will be used for personal
expenses - you might want to divide the loan into two loans - personal and business. You will not be able to deduct any of your personal expenses. However business expenses
(including any interest
you will pay on the business loan will be deductible
In both those scenarios would I need to pay taxes on the dollar amount they loan me?
The loan is not your taxable income
and will not be reported on your tax return
- regardless if that is a loan to the LLC or the loan to you personally. The money will be considered as a loan as long as they are expected to be paid back.
If it’s a ‘gift’ and not a loan is it still taxed?
As a recipient of the gift - the person does not need to claim it as income
in the US
. Regardless of the value. Please see for reference IRS
publication 525 page 34 (left column)- http://www.irs.gov/pub/irs-pdf/p525.pdf
Gifts and inheritances
. Generally, property
you receive as a gift, bequest, or inheritance is not included in your income. However, if property you receive this way later produces income such as interest, dividends
, or rents, that income is taxable to you. If property is given to a trust and the income from it is paid, credited, or distributed to you, that income is also taxable to you. If the gift, bequest, or inheritance is the income from the property, that income is taxable to you.
However the donor might need to file a gift tax return
when the total gift value is above $14,000 (for 2013). There will not be any gift taxes
unless the lifetime limit (which is currently $5,250,000) is reached.
Let me know if you need any help with tax related issues.