It depends on the character and nature of the loan. If this was a personal unsecured loan, no interest paid is deductible. You may not deduct interest expenses from an unsecured personal loan unless the loan is for business expenses, qualified education expenses, or eligible taxable investments.
If the loan was given for any of these other than personal, there should be a written document as Mike9241 mentions listing the contingencies mentioned in his post. This way, if your family member is audited for claiming loan interest, he/she has proof that the loan is for something other than a personal loan.
@bk68
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