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I would like to lend ~50K to help my best friend over sea?

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I would like to...

I would like to lend ~50K to help my best friend over sea? How should I can do it properly to avoid tax? What procedure should I follow?

Accountant's Assistant: The Expert will know how to help. Please tell me more, so we can help you best.

I'm using after tax money to send to my friend over sea, is there tax-related issue when moneys return back to me?

Accountant's Assistant: Is there anything else the Expert should be aware of?

If my friend write a promissory note or loan agreement, plus pay me interest, should it be enough to waive tax?

Submitted: 8 months ago.Category: Tax
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9/18/2017
Tax Professional: Richard, Tax Attorney replied 8 months ago
Richard
Richard, Tax Attorney
Category: Tax
Satisfied Customers: 56,743
Experience: 29 years of experience as a tax, real estate, and business attorney.
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Hi! My name is Richard & I will be helping you today! It will take me a few minutes to type a response to your question. Thanks for your patience!

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Tax Professional: Richard, Tax Attorney replied 8 months ago

Good afternoon. You need not worry about tax regarding the principal of the loan. Neither a loan principal nor its repayment results in income to either of you. The reason is that a loan must be repaid and so after the loan is made and after the loan is repaid, neither of you is better off. Rather, after the loan is made, you have replaced $50,000 in cash with a promissory note receivable. And, that is simply reversed with repaid. The only component which results in income to you is any interest you are paid. You must report it as income, but otherwise there are no tax consequences.

Thank you so much for allowing me to help you with your question. I have done my best to provide information which fully addresses your question. If you have any follow up questions, please ask! If I have fully answered your question(s) to your satisfaction, I would appreciate you rating my service as Good or Excellent (i.e., 4 or 5 stars)(hopefully Excellent/5 stars!). Otherwise, I receive no credit for assisting you today. I thank you in advance for taking the time to provide me a positive rating!

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Tax Professional: Richard, Tax Attorney replied 8 months ago

Good evening. Just following up with you. My screen indicates that you have not reviewed my response. Please let me know if you did not receive it so I can re-send it if necessary. Thank you! Richard

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