Do you have to pay taxes on a personal loan?

My kind of outdated understanding of the situation is that you would pay taxes on the interest you didn't pay - if it were a zero, or extremely low, interest loan. The actual interest imputed is quite low, and the filing would be more of annoyance than a financial consideration. I believe you could dig up the applicable federal rate in the Federal Register.

Thanks, I've decided to take my taxes to a professional so he can sort this mess out. This accountant is the same person that gave me the 1099 so I'm assuming he knows what he's doing. I'll mention to him what you wrote.