In closely held businesses (eg a family business) the loan is oft forgiven….or reduced by the purchase of an asset from the person at an inflated rate. Another common method of payment was issuing redeemable preference shares that are never redeemed and lapse…. - ThreadSky

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stoo2.bsky.social • 137 days ago

In closely held businesses (eg a family business) the loan is oft forgiven….or reduced by the purchase of an asset from the person at an inflated rate. Another common method of payment was issuing redeemable preference shares that are never redeemed and lapse….

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stoo2.bsky.social•135 days ago

As noted later (and ignored by a now blocked dick), the tax aspects of this differ by country. There are limits on the ability to ‘gift’ by forgiving a loan in the US.

daneelssoul.bsky.social•136 days ago

If the loan is forgiven won't you have to pay income tax on the amount forgiven?

Also why exactly are they going to forgive the loan?

stoo2.bsky.social•136 days ago

Depends on the country eg Oz has Div7A, and on detection capabilities of the tax authorities.

Why…. If it’s closely held then it’s a ‘family’ arrangement.

daneelssoul.bsky.social•136 days ago

So you are getting the loan from other family members? How does that solve the liquidity problem though? The point of getting the loan was so that your family had spending money without having to sell the underlying asset.

stoo2.bsky.social•135 days ago

Look at what Trump did. Revalue an asset (eg above market) and ‘borrow’ against the new value from a party perhaps not that ‘interested’ in repayment of said ‘loan’. The money trail can be hard to follow offshore eg ‘back to back’ loan arrangements. Money laundering is an art with many players.

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