IRS rules do not require loans be in writing. Verbal agreements can be valid. However, the IRS will always try to characterize a transaction in whatever manner most benefits the U.S. Treasury. The burden of proof is on the taxpayer. While you might be able to present enough evidence to support a verbal loan transaction it is always simplest to doucment the loan with simple promissory note which is very easy to do.
Not sure Fred's transaction would be of great interest to the IRS. If it is a loan it is not income to Fred but it is also not deductible as a business expense to the agent. If it is income to Fred then the agent would have a deductible business expense unless the payment is determined to be an illegal bribe under Fedral or State law (which may or may not be the case here). In that case, it is pretty much a zero sum game for the IRS to waste any time on.
Obviously, the best evidence that this was a loan is if it has been repaid which is an unknown based on the what has been reported.
Not sure Fred's transaction would be of great interest to the IRS. If it is a loan it is not income to Fred but it is also not deductible as a business expense to the agent. If it is income to Fred then the agent would have a deductible business expense unless the payment is determined to be an illegal bribe under Fedral or State law (which may or may not be the case here). In that case, it is pretty much a zero sum game for the IRS to waste any time on.
Obviously, the best evidence that this was a loan is if it has been repaid which is an unknown based on the what has been reported.
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