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Documenting an Large Loan from a Family Member

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  • 11-20-2013, 01:56 AM
    daneilapron63
    Documenting an Large Loan from a Family Member
    My question involves collection proceedings in the State of: California

    My mother loaned me verbally 150K, to start my new business that sounded very promising. And we discussed that we would get the promissory note and everything done since my niece and i have full intentions of paying her back. Well suddenly while in escrow with about few days of closing she decides to tell us that she does not want to do it and call it off. Which we are completely against, and i'm afraid she can make up something up, i've documented all text and emails of the agreements that we've had since we still have full intentions of paying her back. Any advice would help i don't want to back off from this opportunity can she do anything against myself and niece legally? She gave us the money we posted a deposit. What are my risks if any? i know she made a mistake of just giving us the money without any signed papers but I've expressed that we can signed whatever she wants because we want to pay her back. Can she do something against us?
  • 11-20-2013, 02:13 AM
    Disagreeable
    Re: Verbal Family Loan
    Not really. The problem is you may be into a situation where the loan is considered a gift and taxable without a writing.
  • 11-20-2013, 02:15 AM
    daneilapron63
    Re: Verbal Family Loan
    Yes which is what our concern is, we want a promissory note even if she already gave us the money. Thank you!
  • 11-20-2013, 10:12 AM
    Welfarelvr
    Re: Verbal Family Loan
    Quote:

    Quoting Disagreeable
    View Post
    Not really. The problem is you may be into a situation where the loan is considered a gift and taxable without a writing.

    If it is a gift, then the one who must report it is the donor. There is no income tax on a gift and there is unlikely to be a gift tax. The gift tax return is used to track lifetime gifts and is not a revenue raiser except in the case of those who have gifted over $5.25 million.
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