Can I accept money from a relative?

[BCA2009]

They could. Anyone can commit bankruptcy fraud. You can also have the relative pay you in cash and you can stash it under the matress, you could place that money along with your other million dollars in your offshore numbered bank account and not mention that money either.

Obviously intent is a factor in a situation like this, but if a family member has a sum of money that would help me out in a pinch, I would have no problem promising to pay them back when I was able. And i would consider it a loan. I would not consider it fraud for one minute. As has been said in many posts, BK is a business decision, Plan for it as a business would. Structure transactions so they benefit you. There is a huge difference in commiting fraud and good planning.

As far as normal Christmas and Birthday gifts go, does anyone really thing a trustee cares? I go to my brothers house for dinner 3 or 4 times a week and they watch our son everyday after school because we can't afford afterschool care. I guess I better tally up the value of that and include it as income so I don't commit fraud.

[forgotten]

Obviously intent is a factor in a situation like this, but if a family member has a sum of money that would help me out in a pinch, I would have no problem promising to pay them back when I was able. And i would consider it a loan. I would not consider it fraud for one minute. As has been said in many posts, BK is a business decision, Plan

As you said... intent is the factor. If you pretend it is a loan with the intention of discharging it in bankruptcy(to make it a gift) you lied about it being a loan and are defrading the bankruptcy court, or you lied about your intent to repay the loan and are defrading your creditor.

Structure transactions so they benefit you. There is a huge difference in commiting fraud and good planning.

Once again, correct. Take the $10k gift 7 months before you file, and no problem. Take the gift and draw up fake paperwork to pretend its a loan, not so much.

[Clouddancer]

Gift's aren't income anyway so I guess that is why it doesn't matter whether it's a loan or a gift. Sometimes people ask for help and when someone helps, it isn't decided whether it's a gift or a loan as I would think most people would want to pay it back but the whole reason they ask in the first place was because they were broke.
It is not BK fraud to tell somebody they would rather pay it back then to accept it as a gift.

[forgotten]

Gift's aren't income anyway so I guess that is why it doesn't matter whether it's a loan or a gift

They are for the means test, which was the whole point to start with.
It does not matter if it is taxable or not.

[Clouddancer]

They are for the means test, which was the whole point to start with.
It does not matter if it is taxable or not.

Who said gifts are income for means test?

[forgotten]

Who said gifts are income for means test?

[Clouddancer]

Wouldn't you be in the one off district?

Gifts shouldn't be income.

[robertg]

There's an easy way to keep it from being considered income and from failing to qualify as a gift---
and that's for the family member to loan the money. Of course, if you default on the loan and your family member happens to write the loan off as a loss, well, then that's how the cookie crumbles!

[BKDefender]

If you want to defend against an IRS audit claiming that loan was income, you'll need to create a formal loan agreement with the minimum federal interest rate, called the 'Applicable Federal Rates' or AFR available at http://www.irs.gov/app/picklist/list/federalRates.html (click on the current month and go to page 3 for the minimum rate that should be charged in the agreement.)

If the rate you charge a friend or family member is less than that, then it is a 'below market rate' loan and an auditor can presume that it was a gift never intended to be paid back (unless of course payments are being made and it is paid back...) i.e. if you loan money and the agreement doesn't provide for an interest rate at the current AFR and the loan is later written off, the IRS can consider it a gift for income purposes to the recipient.

Using this method a family member can 'loan' you and your spouse the money to buy a house, and write-off $24k of it each year as long as the minimum principle and interest payments do not exceed $24k/yr. If they do then they'll have to take it out of their lifetime gift allowance (~$2M or so now I think.)

--William

[gmk]

Quite awhile ago I lent my brother in law a big chunk of money to help them with some business problems. They survived the crisis and went on to do very well. They paid me back some years later.

In Nov '09 we met up at my son's wedding and I had a chat with him regarding my financial crisis and I got a no strings attached check for $5,000 which I immediately deposited.

When I brought this up to my attorney he dismissed it as a one time gift, implying that he would be holding this out of income. He also will be holding out my severance paycheck. He would not hold out a weeks vacation check or my wife's year end bonus.

So, I guess, whether a gift from a family member is used in the 6 month look back appears to be another one of those District related issues?