Is there any possible tax implication if I lend money to a friend with a check, and get the money back in cash within a day?

[shihaoyu]

Amount over $10,000

[MaryK4 · Accepted solution]

The IRS treatment of loans is:  (but it is unlikely they would detect or audit a one-time transaction).

Below-market loans. A below-market loan is a loan on which no interest is charged or on which the interest is charged at a rate below the applicable federal rate. If you make a below-market gift or demand loan, you must include the forgone interest (at the federal rate) as interest income on your return. These loans are considered a transaction in which you, the lender, are treated as having made:

A loan to the borrower in exchange for a note that requires the payment of interest at the applicable federal rate; and
An additional payment to the borrower, which the borrower transfers back to you as interest.
Depending on the transaction, the additional payment to the borrower is treated as a:

1. Gift,
2. Dividend,
3. Contribution to capital,
4. Payment of compensation, or
5. Another type of payment.

The borrower may have to report this payment as income, depending on its classification.