Interest-free or below-market loans

Question

Quizplus · Accepted Answer

According to IRS regulations, interest-free or below-market loans may result in treating the borrower as paying interest, where interest is imputed and the borrower is required to report it as interest income on their tax return. However, if the loan is deemed to be a gift, the entire loan proceeds may be treated as a gift and subject to gift tax. There is no set minimum amount of interest income that must be imputed on these types of loans.

Interest-Free or Below-Market Loans