If you borrow $19,000 from someone to pay off some credit debt, can you be liable for taxes on this?

Question

My mom is giving my sister $19,000 to pay off her credit debt. She will repay her for the next few years on a monthly basis. Can she be liable for some sort of income or gift tax for this?

Answer 1

No.  But your mom could be liable for gift tax.

Answer 2

If they do sign a contract, make sure they get it notorized and filed with your county clerks office in case the IRS does come asking about it!!!!

Answer 3

Debt is not income.

Answer 4

If she defaults on the loan whatever she doesn't pay back can be considered income and a loss to your mother which she could writ off on her taxes.