"Vernon V Chatman III" <vvc_[at]besttaxplace.com> wrote:

- quote -

Well it's the AFR, I just don't remember what term.

--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Norwood, MA 02062
www.woods-financial.com

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Let me clarify.

Client receives income from Trust set up by mother, now
deceased. K-1 for trust shows dividends, interst, cap gains,
etc. A loan from a relative is being considered so Client
can payoff existing home mortgage. Issue relates to what
interest rate, if any, needs to be charged to deal with
imputed interest rule.

Client will likely take out a reverse mortgage.

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"Vernon V Chatman III" <vvc_[at]besttaxplace.com> wrote:

- quote -

The only time I can think of that a gift of income would not
be taxable to the donnee would be if it were from a grantor
trust, such that the grantor was taxed on the income.
Someone has to be.

Stu

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Is distributable income (dividends, interest, capital gains)
from a trust for the benefit of person X [trust requires a
fixed payment per month to person X] includable in the 'net
investment income' of person X (the borrower) in detemining
whether the gift loan execption applies?

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