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    drewmclaren1's Avatar
    drewmclaren1 Posts: 1, Reputation: 1
    New Member
    		  
    #1

    Jul 31, 2016, 01:52 PM
    I am a U.S. citizen looking at making a loan to a small Australian Craft Brew Biz
    Some details. I'm already a small equity partner in the company and now looking at making them a 12 month loan from my personal finances to ramp up their business quickly. As a US Citizen making this loan to an Australian entity, I'm foggy on how the interest will be taxed. I'm certainly hoping it won't be double taxed by both countries but looking for insight.
    Thanks in advance and Cheers!
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #2

    Jul 31, 2016, 02:30 PM
    The interest received will DEFINITELY be taxed by the U.S.

    If it is also taxed by Australia, you can claim a credit by filing Form 1116 (Foreign Tax Credit) for passive income, which probably results in a dollar-for-dollar credit against your U.S tax liability on the interest received.
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