Here’s the situation: A family member wants to sell a substantial amount of his gold coins and have the dealer transfer the profits directly to me as a loan that I can use towards buying a house. Why he’s doing this:
A) so I can have an interest free loan towards making my downpayment (and yes, I have since found out that there is no interest-free loan in the eyes of the IRS, but that’s another matter)
and
B) He believes that, if the profits never touch his bank account but go directly to me, then he is essentially transferring his money from one type of investment (gold) to another (real estate) and can avoid the capital gains income tax (which I believe is very high on gold).
I am planning on consulting a tax lawyer, but I just thought I’d see if anyone knows anything here, too.
Would this plan work? Is there anything illegal about it?
Serious answers only, please. thanks in advance.