Tax
Nov. 26, 2013
Loans aren't taxable income, but what exactly is a loan?
Can the IRS come along and claim that a "loan" you received isn't a loan at all and was actually income? Yes, it can.
Robert W. Wood
Managing Partner
Wood LLP
333 Sacramento St
San Francisco , California 94111-3601
Phone: (415) 834-0113
Fax: (415) 789-4540
Email: wood@WoodLLP.com
Univ of Chicago Law School
Wood is a tax lawyer at Wood LLP, and often advises lawyers and litigants about tax issues.
When your uncle or your best client loans you $10,000 to tide you over, is it taxable income? Fortunately, no. What about when the bank loans you $100,000? No again, provided it's a real loan.
In a personal, business or family context, loans aren't income. But the loan vs. income distinction tends to land lots of taxpayers in trouble. If you receive a payment you can't quite explain, you might be tempted to call it a loan....
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