Hi again:)))) An old friend of us returned our money that he borrowed from us long time ago. Is it taxable?

Question

Hi again:)))) An old friend of us returned our money that he borrowed from us long time ago. Is it taxable?

Answer 1

The proceeds of a loan are not taxable income to the borrower.  The repayment of the principal is not taxable income to the lender.  Any interest paid is taxable as ordinary income.

If you took a bad debt deduction in a prior year, the repayment of the loan now would be taxable income to you.  If you didn't take a bad debt deduction previously, then it's not taxable income.

Answer 2

No, you already payed the tax on it before you gave it to him. Any interest however may be taxable.

Answer 3

bostonian is right on the money....says my income tax textbook