foreign private lender

2 Replies

So my son in-law, my son and I want to run a deal. The in-law's uncle is wealthy and willing to lend us money for a commission on the profits - but he lives in Mexico. I have many questions about whether this is possible. How will he transfer the money? How is it taxed? Loan? Gift? it seems like it is so close but so far. Anyone have any insight on this?

no different than any other loan.. although there is a withholding if your paying foriegners interest but there is a form you can sign and put in your file that puts them on notice they need to pay income tax and you don't have to withhold. but if their income is less than the amount needed to file.. its no issue.

but generally speaking piece of cake.. they just wire the money to your account.  or use forex exchange.

My sister in-law is a CPA and she said that it may be dicy if there is no interest - I'm not sure if the percentage of profits Constitutes interest? The tax laws guard against family members giving interest free loans apparently. Would we have to have a legal documents t stating the stipulations s of the loan for tax purposes?

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