Looking on the net from stuff in the early 1990's, it would appear that if you guarantee a loan for someone, you are treated as having made them an immediate gift - even if the loan never defaults - is that still the case please?
2007-12-06 14:54:49 · 3 answers · asked by Anonymous in Business & Finance ➔ Taxes ➔ United States
Logic would say no gift unless a default.
I only worry as the number of web sites that hint at a problem without actually expanding upon it.
e.g.
http://www.wwh-cpa.com/articles/Art3_Intrafamily_Loans.htm
..
- In this case there is definitely a difference between guaranteed or co-signed - cosigned =cosignee can be chased for money anytime, guarantee, only if other person defaults.
So the issue is guarantee the loan, perhaps that just applies in this area.
2007-12-08 07:29:02 · update #1
www.wwh-cpa.com/articles/Art3_Intrafamily_Loans.html
this is correct url
2007-12-08 07:35:36 · update #2
www.wwh-cpa.com/
articles/
Art3_Intrafamily_Loans.html
You'll have to type this in - this should work!!
2007-12-08 07:37:43 · update #3
That is not the case nor has it ever been the case. There are no tax consequences to cosigning a loan. (There could be if it goes into default but not if it doesn't.)
2007-12-06 14:59:09 · answer #1 · answered by Bostonian In MO 7 · 1⤊ 1⤋
Guaranteeing a loan under current banking rules is called 'cosigning', that is, you guarantee the loan will be repaid, whether the borrower pays it, or you have to pay it.
There is no tax liability for cosigning a loan. However, there is the real possibility of having to repay the loan, if the borrower defaults.
2007-12-06 22:58:33 · answer #2 · answered by Stuart 7 · 2⤊ 0⤋
What you may be remembering is the bad debt deduction rule--that if you cosign a loan and then pay it off, you can't take a bad debt deduction because you were not the lender....
2007-12-06 23:10:28 · answer #3 · answered by Anonymous · 1⤊ 0⤋