if you loan her more than $10,000 you
1) you can charge her interest or not. the IRS doesn't really care but there are tax consequences
2) if you do not charge at least the applicable federal rate (see the link) then the IRS says you have interest income at least equal to the applicable federal rate computed as specified,
3) if you charge less than the applicable federal rate two things occur
a) your daughter has made a gift to you of the difference between the AFR interest and the interest she actually pays you
b) you have interest income taxable for both federal and state purposes equal to the interest she pays you plus the additional interest computes using the AFR rules.
4) if you charge her more, you simply have more interest income. there is no effect on her.
put another way if the loan is for more than $10,000 you can not escape having interest income for tax purposes.
ignore the 110/120% rates certain transactions require the use of higher AFR rates
