@Deborah26 wrote:
If the annual interest was not forgiven but was gifted to the related party, is the lender still required to report the interest as income on the loan?
If it is a legitimate bona fide loan, with the expectation of being paid back, the lender must charge interest and report the interest as taxable income. If the interest is paid, but later gifted back to the borrower, it is still taxable income to the lender. Gifts are not tax deductible and do not reduce taxable income.
