Unstated Interest Paid

Unstated Interest Paid

The percentage of interest the IRS assumes was paid on a loan, even if that interest was not actually paid. Taxes are assessed on unstated interest. For example, if one makes an interest-free loan to a family member, the IRS assumes that the loan is repaid with interest. The same applies to zero-coupon bonds (unless the bond is otherwise tax exempt, like a T bill).
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