Just an observation … if the OP is willing to just give this money away … then they’ll not be hurting to run this by a tax attorney.
I suggest the OP insist it’s a gift, because he loves them. If they want to pay it back, fine, but it’s because they love him right back. If things don’t work out, well, it’s the love that counts first and foremost.
Over a matter of $20, probably not. You didn’t think my OP was about such at trifling quantity, did you?
If I was going to loan/gift a friend or relative a few hundred or even a few thousand dollars, I probably wouldn’t worry. But larger amounts have the potential to draw the attention of the IRS; IMHO, it’s worth consulting a pro to make sure it gets handled correctly so as to avoid expensive surprises later.
Of course they will be hurting: consulting professionals costs significant money. And it is only worth doing if there are very substantial amounts of money involved. So OP, give us your best estimate of the amount of money involved.
As to structuring it into two or more transactions that is not needed:
Why? I think that an attorney (of any kind) is really the last person you want involved here. There is no existing tax dispute. There is no desire to follow any legally questionable tax accounting strategy. And it’s a friendly situation, so there’s no desire to set up any kind of enforceable loan contract.
What’s needed is a good accountant who understands the simplest way to account for a gift or a loan that involves forex and two countries’ tax codes, without undue complication or unforseen tax pitfalls. I’m not sure such people exist for personal taxes (i.e. outside the corporate world), but the gap isn’t filled by attorneys.
OP is this over $28,000?
OP, are you a multi-millionaire, or do you plan on being one when you die?
Even if the loan is over 28000 and you decide to forgive some, it wont be a issue unless you forgive more than $28K a year.
SWAG right now would put it between $50K and $100K, but this could change with a more thorough accounting of the recipient’s available liquid assets
So spending a few hundred bucks to consult with a few CPAs is pretty minor in the scheme of things.
No, there wont, unless they pay interest.
Sure, that should work. A gift that may or may not be repaid of $28K this year, the same next year. No tax forms or consequences then. Just dont charge interest.
Get a non-recourse IOU, and then forgive what is not paid back as a gift.