Cmiiw but i think that is only for loans above $10,000(with certain exceptions) and limited to the borrower's net investment income if that makes a difference in your case.
Sounds like you are right! Interesting to know.
Imputed interest rules also do not apply to:
>Gift loans of $10,000 or less (aka de minimis loans), unless it is used to purchase income producing property, in which case, the following $100,000 rule applies.
>Loans of $100,000 or less. If the loan is used to purchase investment property, then imputed interest rules do not apply if the net investment income from the property does not exceed $1,000.
If net investment income is greater than $1,000, then the gross investment income is the lesser of the imputed interest, as calculated by using the AFR, or the actual gross income earned, since the objective of the imputed interest rules was to prevent income shifting. Net investment income is gross income from all investments minus related expenses.
Net Investment Income = Gross Investment Income – Investment Expenses
If Net Investment Income ≤ $1,000 then Imputed Interest = 0
Else: Net Investment Income = Lesser of (Imputed Interest Computation or Actual Gross Investment Income) – Investment Expenses
However, if the primary purpose of the $100,000 loan was tax avoidance, then the interest is imputed and not limited by the borrower's net investment income, since the purpose of the imputed interest rules was to prevent high tax-bracket taxpayers from shifting income to lower bracket relatives.