hoos89 wrote:QContinuum wrote:kgm1990 wrote:Just a heads up, there's no such thing as a 'no interest loan'... the IRS will require that you give some sort of interest on top of that principle amount. You know... unless you plan on lying about it being a loan on your taxes (or he does too).
The IRS cannot (and does not) prohibit folks from extending interest-free loans, and cannot (and does not) require folks to pay interest.
https://investinganswers.com/financial- ... terest-530
It's absolutely true that extending an interest-free loan can (does) have tax consequences for both the giver (in this case, imputed interest) and the recipient (imputed gift). But that doesn't make the loan not interest-free. In the example at the link, the IRS isn't forcing the son to actually pay his parents $2000 interest.