Taking a Loan in a Foreign Country

September 3, 2009 8:33 PM

I would like to know if I took a bank loan in another country and had the money wired to me here in the US, around 160K, if the IRS would tax that amount. I called them and apparently they didn't know because they could not answer the question. I will have to pay back that loan so i would imagine that the amount wouldn't be taxed here (as long as i prove to the IRS that i got the loan).
posted by Giovanna123 to work & money (6 comments total)

Find an accountant. Aski him this question, not ask metafilter.
posted by dfriedman at 8:44 PM on September 3

Find an accountant. Aski him this question, not ask metafilter.

That said, why WOULD they tax it? It's not income, so it's not subject to income tax. I know bugger all about US tax law, but what tax do you think it would attract?
posted by pompomtom at 8:56 PM on September 3

what tax do you think it would attract?

The money laundering tax?
posted by yoyo_nyc at 9:28 PM on September 3

I can't imagine how that would trigger any tax liability if it's a loan that's payable with interest.

If it's some kind of dealio where it's a fake loan that gets "forgiven" over time, you've got a problem. A regular loan, no problem.
posted by Sidhedevil at 9:58 PM on September 3

The money laundering tax?

It's funny, I do a bit of work on anti-money laundering precautions, and if we detect a possible, it's not the tax department we tell.
posted by pompomtom at 10:22 PM on September 3

I think (on a totally uninformed level) that sidhedevil is right- if it's not a "loan" from the Caymen Islands Bank and Money Laundering Vacation Resort, it would probably be fine. Further, I doubt anyone would notice until a few years down the line. You might get audited because you would seem to have $160 large too much money. You would show them that it was aloan and your cancelled checks for the repayments.

I also don't believe loans turn into income until they are converted into gifts. So if you take out a loan in 2005, and it is forgiven in 2009, it counts as income in 2009.

Again, completely uninformed except as far as I have read the 1040 instructions and read news reports about sneaky politicians.
posted by gjc at 6:35 AM on September 4