- quote -

Are you married? Is your son married?

You can redraft your note so that he pays you back fully
amortized after a certain period of time, keeping payments
to the amount of the gift tax exclusion. If neither of you
is married, the note will have to be for 29 years. If you
are married, or if your son is married and his wife take
responsibility for half the debt, the time period is down to
about 11 years.

If you are both married you could get it down to about five
years.

Then have your son make an annual payment to you each year,
and you forgive the payment as a gift.

The only downside I can think of is that you will have some
phantom interest that will be considered taxable. So longer
term (9 years or more) is better because you can use a lower
interest rate.

Stu

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Raymond wrote:
- quote -

http://www4.law.cornell.edu/uscode/26/7872.html may give you
some info.

If you can get the amount down to 100,000, there is a
special provision.

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raymond912002[at]yahoo.com (Raymond) wrote:

- quote -

I would appreciate any ideas.

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I loaned my son $ 200,000 to buy into an LLC. Unfortunately
the investment was a failure and his share of the LLC (it's
market value) is very low. He still pays me interest on the
200M at the AFR.

I would like to forgive the loan but I don't want to apply
$200,000 to my gift tax credit. Additionally, each year I
gift him an amount equal to the gift tax exemption.

Do I have any choices other than collecting interest or
using my gift tax credit? Thank you.

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