Cash money from brother in-law to start a business.

[cabbievinnie]

What is the name of your state (only U.S. law)? Utah I have poor credit and have only been making around $12,000 a yr. for the past 3 yrs. My brother in-law who believes in me wants to give me $50,000 cash to purchase a 2009 tow truck outright from a dealer to start my own towing business. this is basically a gift that I do intend on paying back as quickly as possible. My question is that this transaction will probably send up huge red flags with the I.R.S., and my bank. Will he have to pay a gift tax? Can we show this as investment capital somehow? He is not a U.S. citizen. Can make him part of my new L.L.C.? HELP!

 

[LdiJ]

What is the name of your state (only U.S. law)? Utah I have poor credit and have only been making around $12,000 a yr. for the past 3 yrs. My brother in-law who believes in me wants to give me $50,000 cash to purchase a 2009 tow truck outright from a dealer to start my own towing business. this is basically a gift that I do intend on paying back as quickly as possible. My question is that this transaction will probably send up huge red flags with the I.R.S., and my bank. Will he have to pay a gift tax? Can we show this as investment capital somehow? He is not a U.S. citizen. Can make him part of my new L.L.C.? HELP!

Treat it as a loan and draw up proper loan documents. That resolves the entire problem.

 

[davew128]

Treat it as a loan and draw up proper loan documents. That resolves the entire problem.

Well apart from the requirement to withhold US income tax on the interest payments to the non-resident brother-in-law.

 

[latigo]

What is the name of your state (only U.S. law)? Utah I have poor credit and have only been making around $12,000 a yr. for the past 3 yrs. My brother in-law who believes in me wants to give me $50,000 cash to purchase a 2009 tow truck outright from a dealer to start my own towing business. this is basically a gift that I do intend on paying back as quickly as possible. My question is that this transaction will probably send up huge red flags with the I.R.S., and my bank. Will he have to pay a gift tax? Can we show this as investment capital somehow? He is not a U.S. citizen. Can make him part of my new L.L.C.? HELP!

Sounds to me as if you brother-in-law might be looking upon you as a floating "Laundromat".