@Mike9241 Hello,
The purpose of this question is just I want to learn more tax knowledge from you.
When you say" if I charge less than the applicable federal rate two things occur (b) I 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.
I try to understand this with numbers.
Let's say If the applicable Federal rate is $100, then I only charge my daughter $50( the number she pays me) .
What is my taxable interest income? $50 +?
What is the additional interest computes using the AFR rules?
Thanks for all the answers that I got, it expands my understanding of tax and I learned something from you.
