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I have a pair of married clients from India who lent their son money to buy a restaurant in India. They now reside in the US and are naturalised US nationals, and now that the business is profitable the son is paying them back with profits from the business. In 2019 they received around $130,000 from their son. How best to declare this income to minimize tax?

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    Is there anything documenting the loan including interest rate and number of payments? Jun 24, 2020 at 12:21
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    Before getting into the loan stuff, ask your clients if they have been declaring their income from any assets in India to the IRS from the time they became permanent immigrants to the US, and declaring the existence of these assets on Schedule B of their income tax forms and separately to the US Treasury (FinCen) for FBAR purposes. Jun 24, 2020 at 13:25

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Parents don't have to declare it as it is a loan repayment however they must keep proof/record of loan given. Any amount above loaned amount has to be declared as earnings if amount paid back is more than loaned amount.

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  • Where does one declare a loan on a US tax return? Jul 4, 2020 at 15:59
  • If he has used money for setting up a business then he had to declare the loan on his company's account. There isn't a loan section on personal tax return though AFAIK.
    – Raymond
    Jul 4, 2020 at 16:06
  • The question is about the parents' (lenders') US tax returns and not about the son's (or the son's business's) tax returns or books in India. Jul 4, 2020 at 19:23
  • Updated my answer.
    – Raymond
    Jul 5, 2020 at 17:06

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