Profit based loans

JamesInGA — Mon, 04 Mar 2019 16:05:32 GMT

I have a friend in the large machinery business and he contacted me about expanding inventory. So we struck up a deal where he finds machinery, I wire him the money to purchase it and when it sells, he wires me back my initial money plus 50% of the profit. Since these wires are in the 20k-70k range, I assume the IRS is getting notified and they're going to want to know what's going on. So my question is, how do I treat the profit from the "loans" for tax purposes?

Re: Profit based loans

PaulaM — Mon, 04 Mar 2019 20:28:43 GMT

You could treat some of it as interest but the rest should be treated as Schedule C income.

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Profit based loans

Re: Profit based loans