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Comment by kanamekun | Hacker News Reader

Actually I just looked at Zidisha's website to see how it works, and their terms of use [1] basically state that once you make a loan, the money is no longer yours:

<< Zidisha makes no guarantee or representation that funds lent through its website will be repaid to lenders, regardless of whether the loans financed with lender funds are repaid to Zidisha. Any cash payouts are promotional gifts offered solely at Zidisha's discretion. >>

So basically, I make a loan and then if the entrepreneurs makes a repayment, Zidisha can choose to give me my money as a "promotional gift." But wouldn't lenders have to pay taxes on their "promotional gifts"? And aren't I getting taxed on my entire loan (principal and interest), not just my interest income like with a normal loan?

I don't get it... why structure things this way?

[1] https://www.zidisha.org/index.php?p=5

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I agree that this is confusing.

We state in our terms of use that we are not obligated to return lender funds because doing so could be construed as selling securities under US law - something we are not licensed to do. In practice, we have honored every lender request to withdraw funds that we have received since we were founded four years ago.

I am not a tax expert, but I would be surprised if a tax authority construed Zidisha lending activity as taxable investment income, because according to our terms of use the loans are not financial assets.

> I am not a tax expert, but I would be surprised if a tax authority construed Zidisha lending activity as taxable investment income, because according to our terms of use the loans are not financial assets.

Your practice, as you describe it, treats them as such, and regulators are often prone to treat things as what they are in practice even if the contract between the two parties claims they are something else.

(This applies to securities authorities as much as to tax authorities.)

You found more information than me.

Tried to "read terms of service" > redirected to the main page.

Whois returned "not found"

dig returned a GoDaddy dns proxy.

Two Emails sent to me by them. The first a email confirmation. Zidisha, Inc. 21900 Muirfield Circle #302 Sterling, Virginia 20164

The second thanked me for joining their email list.

My profile page has several links like "Lend Fund", "Join a group". Not sure what to do next... Basically this meant i signed up for a mailing list

Hi iiiears, thanks for giving Zidisha a try and for this feedback. I'm so sorry our website gave you a redirect when you tried to view our terms of service. Would you mind letting me know which browser you are using so that we can try to replicate and fix the bug?

We'll try to make the next steps after creating a new lender account clearer. If you would like to make a loan, you can do this via the "Lend" page.

Presumably to avoid liability issues associated with representing the loans as investments, particularly relieving themselves of any obligation to chase missed repayments on behalf of creditors.

In some respects, having the up-front option to to waive any right to withdraw repaid loans might be better for people who actually have no intention of doing anything with repayments other than loan them to other Africans, assuming charitable donations whose use and re-use you're continually able to influence can still be legally tax deductible.

Hi notahacker, a few of our lenders have requested non-withdrawable accounts. The idea is that the full amount credited to these accounts would be tax-deductible, and lenders would retain control of how the funds were lent out. Informal consultations among our lenders did not reveal strong enough demand to justify the cost (mainly in additional complexity for newcomers to our platform to take in), so we refrained from introducing this option for now.

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