How to Document a Family Loan the IRS Will Respect

An undocumented loan can be recharacterized as a gift. Documentation is what protects the whole arrangement.

For the IRS to treat a family loan as a loan - not a gift - it needs to look like one: a written promissory note, a stated interest rate at or above the AFR, a fixed repayment schedule, and evidence that repayments actually happen. Without those, the entire principal can be treated as a taxable gift.

This is exactly the paperwork families tend to skip and later regret. Pari generates a compliant note, tracks the schedule, and keeps a clean record of every repayment - turning a shoebox of good intentions into documentation an examiner or estate attorney can rely on.

See how Pari structures family lending.