Below-Market Loans Between Family and Friends: When the IRS Imputes Interest You Never Received

Can lending money to a family member trigger taxable income even if you don’t charge interest?Surprisingly, yes. Under federal tax law, below-market loans can cause the IRS to impute interest income to the lender — even when no cash interest is ever paid. This issue commonly arises with family loans, informal business loans, divorce-related advances, [...]