I want to loan $70 k from a friend of mine for a investment.

  • Though I think you got your answer, your question would make more sense if the word loan was used consistently here. If you're getting money FROM your friend, then you are borrowing money, while if you're sending money TO your friend, you are lending (or loaning) money. I think you are borrowing from the total context, but you're not entirely consistent. – Joe Jan 16 '15 at 20:02
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    Welcome to Money.SE. You've edited the question, and there's now no question to answer. How can we help you? – JTP - Apologise to Monica Jan 16 '15 at 20:28
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    (Note: if you edited it to remove bits about the question that pointed to potential illegal activity, your edit doesn't actually accomplish that - the information is still there in the edit history, viewable by anyone. I'd also note that nothing you posted is per se illegal, particularly if it hasn't been done yet.) – Joe Jan 16 '15 at 20:30

to trigger no audit , he want to make cash deposits of 9500$ around in to 7 of my friends accounts.

This is 'structuring' and is very illegal. Deliberately avoiding the $10k limit is itself a crime, even if the underlying transaction is legal.

As for the rest of the question, giving your friend $70k as part of a genuine loan transaction is not a taxable event on either side. But the interest he pays you is taxable to you; if you loan it at 0%, the interest he would have paid is a gift, which can be its own taxable event.


A cash transaction doesn't "trigger an audit"

In the US, depositing/withdrawing cash in excess of $10,000 is reported. The report doesn't trigger an audit. The federal government will know that your friend at one point had at least $10,000 that came from somewhere - if this is what you are concerned about then you shouldn't make the loan. It simply assists in an audit that is either completely random or triggered for other reasons.

Making smaller cash transactions to avoid reporting requirements is called structuring, and will land your friend in prison and the cash seized. Oops.

Good luck with your investment!

  • @a600, if the cash gets seized, your friend probably won't be able to pay you back. Is losing $70,000 a problem for you? (If not, shouldn't you have a lawyer on retainer for questions like this?) – cjm Jan 16 '15 at 20:08

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