how can I justly avoid paying taxes on this? | TigerDroppings.com

Posted byMessage
Tiger Attorney
LSU Fan
New Orleans
Member since Oct 2007
14704 posts

how can I justly avoid paying taxes on this?


Let a friend borrow a couple thousand cash for bills...was pretty sure I might not get paid back ever.

Well...he finally paid me back via a company check.

I should not owe taxes on this money but it would appear to be income if I were audited...any way around this?

I will deal with it if not bc I was surprised to get paid back anyway...







Back to top
Share:
Teddy Ruxpin
LSU Fan
New Orleans, LA
Member since Oct 2006
18065 posts
 Online 

re: how can I justly avoid paying taxes on this?


What a shitty friend.





Back to top
I Love Bama
Alabama Fan
Alabama
Member since Nov 2007
31909 posts
 Online 

re: how can I justly avoid paying taxes on this?


This makes no sense. Just put it in the bank and don't report it. A few thousand is nothing





Back to top
Tiger Attorney
LSU Fan
New Orleans
Member since Oct 2007
14704 posts

re: how can I justly avoid paying taxes on this?


And if I get audited?





Back to top
OTIS2
LSU Fan
NoLA
Member since Jul 2008
25490 posts
 Online 

re: how can I justly avoid paying taxes on this?


Don't sweat that. Get the friend to sign an acknowledgment that the check was repayment of a loan if you're really concerned.





Back to top
Tiger Attorney
LSU Fan
New Orleans
Member since Oct 2007
14704 posts

re: how can I justly avoid paying taxes on this?


Ok thanks





Back to top
Meauxjeaux
Memphis Fan
I have 89,275 posts with my alters
Member since Jun 2005
16301 posts
 Online 

re: how can I justly avoid paying taxes on this?


Can't you draft a quick loan agreement that shows paid in full, have him sign it, and viola... audit documentation.





Back to top
Layabout
UNO Fan
Baton Rouge
Member since Jul 2011
6522 posts

re: how can I justly avoid paying taxes on this?


I wouldn't worry about it unless I got a 1099 in the mail in January.





Back to top
ZereauxSum
LSU Fan
Lot 23E
Member since Nov 2008
7975 posts

re: how can I justly avoid paying taxes on this?


quote:

And if I get audited?


This is actually an interesting question.

I would imagine that throwing together some documentation of the loan would be the answer but I'd like to see what some of our tax experts have to say.






Back to top
foshizzle
LSU Fan
Washington DC metro
Member since Mar 2008
29602 posts

re: how can I justly avoid paying taxes on this?


I'm not Poodlebrain, but the first question I'd ask is how frequently you get audited. Some small businesses do but if you're the average Joe it'll never happen and this isn't worth worrying about.

I'd be more worried about your friend. He is paying you via company check and therefore is probably writing off the loan as a business expense. And that's assuming he is a sole proprietor, if he isn't then he's cheating the other owners on top of that.






Back to top
Meauxjeaux
Memphis Fan
I have 89,275 posts with my alters
Member since Jun 2005
16301 posts
 Online 

re: how can I justly avoid paying taxes on this?


Exactly. He does not have to take it as income and then pay you. Thus the company check. I assume he is the business owner.





Back to top
Poodlebrain
LSU Fan
Way Right of Rex
Member since Jan 2004
14933 posts

re: how can I justly avoid paying taxes on this?


The simplest way to avoid paying tax on all of the money you were paid is to have the payer issue you a 1099-Int for the portion of the money that was interest. You report that amount as interest income, and the balance of the payment is not reported as income as it is the repayment of the loan principal.

If there was no interest paid on the loan, then you need to follow the rules for below market rate loans. You'll have to look them up, or consult with someone familiar with them, to see what the requirements are since they depend on the facts and circumstances of the original transaction and any subsequent payments.






Back to top
foshizzle
LSU Fan
Washington DC metro
Member since Mar 2008
29602 posts

re: how can I justly avoid paying taxes on this?


quote:

If there was no interest paid on the loan, then you need to follow the rules for below market rate loans. You'll have to look them up, or consult with someone familiar with them, to see what the requirements are since they depend on the facts and circumstances of the original transaction and any subsequent payments.


Whoa now. There's something accounting-related that Poodle doesn't know?







Back to top
Poodlebrain
LSU Fan
Way Right of Rex
Member since Jan 2004
14933 posts

re: how can I justly avoid paying taxes on this?


quote:

Whoa now. There's something accounting-related that Poodle doesn't know?
Actually, I am familiar with accounting for below market rate loans, usually loans made between related parties. It's just not possible to guess all of the facts and circumstances surrounding the OP's situation to give an answer that is more than a guess.

International taxation is an area I have little to no experience with. Oil and gas industry accounting is also foreign to me.






Back to top
the LSUSaint
LSU Fan
Member since Nov 2009
5209 posts

re: how can I justly avoid paying taxes on this?


Just write loan repayment on the memo line before you deposit. /thread





Back to top
foshizzle
LSU Fan
Washington DC metro
Member since Mar 2008
29602 posts

re: how can I justly avoid paying taxes on this?


quote:

Actually, I am familiar with accounting for below market rate loans, usually loans made between related parties. It's just not possible to guess all of the facts and circumstances surrounding the OP's situation to give an answer that is more than a guess.


Oh. In that case the Earth can resume spinning about its axis.






Back to top


Back to top




//