<p>Actually, in 2013 the annual gift tax exclusion is $14,000 per year per person, and above that each person has a total $5.25 million exclusion from gift/estate taxes. It would be very easy to set up a loan structure as mentioned above without impacting anyone’s gift tax or income taxes. You can also leverage the annual debt forgiveness amounts by 2x-4x if uncle is married and you are includedin the loan/gift program.</p>
<p>Also, a zero interest loan creates a gift, or phantom income to uncle, in the amount of the interest that should have been charged per the IRS’ APR minimum interest rate.</p>
<p>If the promissory note will be cancelled upon the uncle’s death, it will need a higher interest rate than the minimum APR.</p>
<p>OP, please do not take random posters’ tax advice, always check with a professional. If your uncle has enough money to pay these amounts, I am sure he has a competent accountant or attorney</p>