Quote:
Originally Posted by GGG
One thing you need to do (my experience is with spousal loans) is physically have them pay you the interest on the loans. So at the end of each year they must pay you the 1%. You then must claim the 1% as taxable income. Since the child doesn’t have income you would have to sell a portion of the investment each year to pay the interest which would trigger capital gains.
|
Or pick an investment that distributes at least 1% per year in dividend (or other) income.
Getting income into the hands of someone with a 0% (or at least lower) tax rate is the point of the strategy, so having some taxable income every year is logical.