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If I borrow money; give the person that loan me the money a promissory note, pay interest annually and promise to repay in full with the proceeds of my life insurance when I die, is the borrowed money taxable to me?
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No. Loan proceeds are not taxable to the recipient, provided that there is a bona fide intention to repay. Even if not repayable, the proceeds would generally be treated as a gift, which would not be taxable to the recipient.
Answered on Nov 05th, 2012 at 12:05 AM