Paying off brother's debt in India -

My question is: US-specific
QUESTION: I helped my brother in India to pay off his defaulted loan with a
bank. He defaulted on a loan for a multi-story shopping complex. Will I have
to pay any tax when I receive my money back from my brother? Are there any
IRS reporting requirements to be followed by me?
---------------------------------------------------------------------------
david ingram replies:
Assuming that you loaned the money to your brother and he is now paying back
a loan, there are no tax consequences unless you are receiving interest as
part of the loan.
There age no IRS reporting requirements as long as the repayment is not in
cash amounts that are carried into the US by an individual.  If the amount
is over $10,000 or several transactions are put together with smaller
amounts to make it look like it is under $10,000 there are  very serious
requirements to report the transfer of the money,.
Read the following old newsletter for an idea.
-----------
David - What are the rules about money laundering or what I really mean is
transferring money across the Canadian US border. I understand that there
are big penalties.
=======================
david ingram replies:
I am just repeating an older newsletter.
========================================
 A.     JUST GOT YOUR E-MAIL ABOUT TRANSFERRING OF FUNDS.   YOUR E-MAILS ARE
VERY INFORMATIVE.   IN MAY OF THIS YEAR I CLOSED OUT MY ACCOUNT IN NEW YORK
STATE THAT I HAD THERE WHILE I WORKED IN THE STATE FOR 40 YEARS.   I
COMMUTED FROM CANADA WHERE I HAVE LIVED FOR 40+ YEARS.  I AM A US CITIZEN.
RETIRED FOR 2 YEARS.  THAT IS THE REASON I TRANSFERRED THE FUNDS(69000).
READ YOUR E-MAIL AND WAS I SURPRISED.  NOW HOW DO I RECTIFY THIS PROBLEM?
IN MAY MY FINANCIAL ADVISERS AT THE CANADA BANK SAID JUST GET BANK DRAFT
FROM THE NEW YORK BANK AND NOTHING ELSE.    APPARENTLY THERE IS SOMETHING
ELSE.  PLEASE HELP WITH SOME ADVISE.  I DON'T WANT ANY TROUBLE WITH THE IRS.
I WANT IT DONE RIGHT.    THANK
And
 B.     Hi David,
Your past few listings have freaked me out. In May 04, unaware of the law, I
withdrew exactly 10,000 U.S from my checking account in U.S. and deposited
in a checking account in Windsor, ON. Since I live in Windsor and work in
Michigan, I transferred the money just for my personal expense. Following
month, I opened a savings account in Canada (US$ savings account) and
withdrew another $5000 U.S. from the same checking account and deposited in
the new account. These were the only transactions I have made (and will ever
make).
What do I do so that blood in my veins can defrost?
Regards,
and
 C.     David,
        This is in regard to the transferring of money from US to Canada. I
work in US under TN and my salary is deposited directly into a US account.
Then I transfer money from US to Canada since I live in Canada. Who is
responsible to report these transactions to IRS? myself or the banks
involved?
thanks
x xxxxx
==================================================
david ingram replies:
Remember that in July 2001 (TWO months BEFORE Sept 11, 2001), US Trust in
New York paid a $10,000,000 (TEN MILLION DOLLARS) fine for delivering less
than $10,000 at a time to Talk Show host Rush LIMBAUGH and others.  At the
time, Rush Limbaugh's name was not made public.  The crime was
"STRUCTURING", that is arranging to give or receive amounts of less than
$10,000 cash to avoid the reporting rules.  In the RUSH LIMBAUGH case, the
US TRUST representative had suggested to Rush Limbaugh, that if he took out
$9,900 at a time, it would not have to be reported.  Limbaugh was using the
money to buy drugs for cash (to support his habit for which he was taken off
the air for five months).
1.     YOU,  and another dozen people who wrote similar letters have nothing
to worry about.  If you transfer the monies out electronically, the US bank
will file form 104 and the Canadian Bank will file form E677,  These two
forms go automatically and you do not have to do a single thing.
 2.     If writer one had taken the $69,000 out of the bank in cash and
writer two had taken his $10,000 out in cash and both drove across the
border with the "CASH" or a negotiable security, they would have had to file
form 105 in the US and form E667 in Canada.  I.E. they should have stopped
at the US border and handed in  form 105 as they  LEFT the USA and then
handed in form  E677 to  the Canadian side as they entered.  Both Canadian
banks would likely then have reported the deposits of more than $10,000
(Canadian) in cash to FINTRAC.
Neither case had any intention to assemble more than $10,000 with multiple
transfers which were under $10,000 each.
3.    In the case of writer three, he is depositing his salary in the
ordinary course of events.  He transfers the money out on a regular basis
and deposits it on a regular basis and then spends it for day to day living
in Canada.  The US bank will not likely report it as suspicious since it is
arriving as one of (likely) many payroll cheques from a legitimate company.
The Canadian bank will not report it because it is coming from another bank
and is obviously a salary cheque, etc.  The exception would be if he
transferred more than $10,000 US out or received more than $10,000 Cdn in
his Canadian Bank.  In that case, the banks would have to report as in "1"
above.
I will put the old newsletter back in here so that the links to the forms
are included.
david ingram replies:  The forms are  E677 and E667 for Canada and as of
September 1, 2004 )today)  104 and 105 for the US if you are bringing the
money out of the US into Canada..
The US bank will report the deposit or withdrawal to the US FINCEN on form
4789 (which is still valid until August 31, 2004) or more likely the new
form 104 which you can find at:   http://www.irs.gov/pub/irs-pdf/ffc104.pdf
When you then move the money to Canada by money order or check, the bank or
financial institution will report it again.
The US penalties for failure to fill in these simple forms is up to $500,000
PLUS 5 years in jail.
If you remove more than $10,000 at any one time, the bank will report those
transactions as well.
If you decide to carry the cash or transport it out of the USA as a
cashier's cheque, you have to file form 105 (old form 4790).  You can find
the form at:  http://www.irs.gov/pub/irs-pdf/ffc105.pdf
Canada has moved its forms in the last few days and i had a devil of a time
trying to find them.  You can find both E677 and E667 below.
http://www.cbsa-asfc.gc.ca/E/pbg/cf/e677/e677-fill-02b.pdf
The E667 is filled out by yourself and E677 is filled out by the financial
institution.
http://www.cbsa-asfc.gc.ca/E/pbg/cf/e667/e667-fill-02b.pdf
Answers to this and other similar  questions can be obtained free on Air
every Sunday morning.
Every Sunday at 9:00 AM on 600AM in Vancouver, Fred Snyder of Cartier
Partners and I will be hosting an INFOMERCIAL but LIVE talk show called "ITS
YOUR MONEY"
Those outside of the Lower Mainland will be able to listen on the internet
at
www.600AM.com
Local phone calls to (604) 280-0600 - Long distance calls to 1-866-778-0600.
Old shows are archived at the site.
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Disclaimer:  This question has been answered without detailed information or
consultation and is to be regarded only as general comment.   Nothing in
this message is or should be construed as advice in any particular
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and all non-contractual duties are expressly denied. All readers should
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specialist in connection with personal or business affairs such as at
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preparation & immigration consultant david ingram, experts on rentals mutual
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