this would appear to be a loan
What kinds of loans have imputed interest
The rules for below-market loans apply to:
- Gift loans—loans between friends and family members other than spouses
Key exceptions to the rules
The tax code provides a couple notable exceptions to the imputed interest rules:
- Gift loans of less than $10,000 are exempt, as long as the money isn't used to buy income-producing assets.
- Compensation-related and corporation-shareholder loans under $10,000 are also exempt if the lender can demonstrate that tax avoidance wasn't the purpose of the loan.
non-tax
The most important thing is simply having a written document containing information on the amount owed, the payment plan, the interest rate and terms to exit the contract in the future.
