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Experience:  29 years of experience as a tax, real estate, and business attorney.
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Is there any type of transfer tax in Illinois I need to sign

Customer Question

Is there any type of transfer tax in Illinois? I need to sign a promissory note for large amount, and want to make sure I won't owe any state transfer tax
Submitted: 3 years ago.
Category: Tax
Expert:  Richard replied 3 years ago.

Good morning. A loan is not a taxable event....It is simply a loan where each person's wealth does not increase or decrease but rather just changes forms....the lender changes cash to a note receivable and the borrower receives cash with an offsetting note payable. With no change in wealth, there is no taxable transaction. Thus, no reporting is required.

 

 

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The information given here is not legal advice. As all states have different intricacies in their laws, the information given is general only. This communication does not establish an attorney-client relationship with you. I hope this answer has been helpful to you.

 

 

Customer: replied 3 years ago.

I meant a transfer tax, not an income tax. For example in Florida I would pay 35 cents on each $100 of the amount of the promissory note, according to FL statutes:

 

201.08 Tax on promissory or nonnegotiable notes, written obligations to pay money, or assignments of wages or other compensation; exception.- (1)(a) On promissory notes, nonnegotiable notes, written obligations to pay money, or assignments of salaries, wages, or other compensation made, executed, delivered, sold, transferred, or assigned in the state, and for each renewal of the same, the tax shall be 35 cents on each $100 or fraction thereof of the indebtedness or obligation evidenced thereby. The tax on any document described in this paragraph 1may not exceed $2,450.

Expert:  Richard replied 3 years ago.
That's not applicable when you are signing a note. That's applicable when you are buying and selling promissory notes as an asset.
Customer: replied 3 years ago.
Well, I am signing a promissory note because I am buying a business for this promissory note. Is this applicable in this situation?
Expert:  Richard replied 3 years ago.
No....not applicable. You are not buying a promissory note as a financial instrument.
Customer: replied 3 years ago.
Sorry, just need clarification... The statute I quoted above says "on promissory notes... executed...in the state", does not say anything about buying them as financial instrument. Just want to be sure.
Expert:  Richard replied 3 years ago.
Again, they are talking about the buying and selling of notes that were executed in Florida, making them Florida instruments. Your situation is not applicable.

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