Is down-payment gift taxable income?

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DEAR BENNY: In January I lent my daughter $20,000 so she could use it as a down payment on her condominium unit. She gave me a promissory note. I took the money out of my retirement account (I am retired). My tax person said this will be added to my yearly income and I have to claim it as my income. I have a friend who works as a loan officer at a bank; she said I just have to claim the interest. Who is right? --Linda DEAR LINDA: From the facts that you have given me, I believe that your tax person is correct. If you withdraw money from your retirement account, normally that is taxable income to you. The theory of retirement plans is that you are able to exclude from your annual income moneys that you put into these accounts (such as a 401(k), and let it grow tax free while you are still working. But when you start withdrawing (and there is mandatory withdrawal when you reach age 70 1/2) this money is ordinary income to you and you have to pay income tax on that money. You ...