Article Archives >> To the Point
I'd like to make an interest-free loan to a 501(c)(3) charity. I've heard I may be taxed on the income my loan generates for the charity. Could this possibly be true?
So long as the loan is loan is not more than $250,000, the answer is “no.” But it is not a totally crazy idea.
The general rule under Section 7872 of the Tax Code is that interest income is imputed to the lender of an interest-free or other below-market rate loan and the amount imputed is therefore generally taxable. There are a number of exceptions to the general rule, however, and a loan to a charity that does not exceed $250,000 is one of them. This can be a very helpful way for charities to fund operations in a difficult economic time. (See Ready Reference Page: “Checklist for Dealing With Tough Economic Times.”)
March 31, 2009
Article Archives >> To the Point
By Ronald W. Clement |
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