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Related parties and imputed interest

TCP Chapter 18 · Area IV · Blueprint IV.C

Families and the businesses they own deal with each other all the time: selling property to a child, lending money to a relative, paying a brother's company. The tax law watches those deals closely. Losses between related parties are disallowed, ownership is counted through family members and entities, and interest-free loans and seller-financed sales have interest imputed. The Blueprint asks you to recall who is related, calculate direct and indirect ownership, calculate gain or loss when property bought from a relative is later sold, and calculate imputed interest. Tessa and Leo work with Martin Okafor, his wife Ada, their daughter Zara and Martin's brother Felix. Figures are for 2026.

In this chapter

1. Who is a related party?
2. Constructive ownership: counting direct and indirect stock
3. Losses on sales to related parties and later resales
4. Other related-party traps
5. Imputed interest on below-market loans
6. Unstated interest on deferred-payment sales

This chapter has 6 lessons, 50 practice MCQs with explanations and 20 simulations, plus flashcards and a recall sheet.

What this chapter covers

• Related parties and constructive ownership
• §267 loss disallowance and later gain
• §1239
• §7872 below-market loans

Chapter 17: Character of gains and losses and installment sales · Chapter 19: IRS forms workshop