Tax
Jun. 14, 2018
Loan vs income distinction can land many taxpayers in trouble
When the facts are ambiguous about whether you have to pay back the money, thinking of it as a loan can seem expedient.
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.
In a personal, business or family context, loans are not taxed as income. But the loan vs. income distinction tends to land many taxpayers in trouble. If you receive a payment you can't quite explain, you might be tempted to call it a loan.
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. Wh...
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