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Good morning. The repayment of principal is not income because it does not increase your net worth. Rather it is simply the exchange of one asset
(promissory note) for another asset (cash). Only interest on the loan would be taxable income
to you. If the note had not interest, if you wanted to be technical, you could impute interest based on the Applicable Federal Rate
, but the reality is that if this is a loan between two private parties and you loaned someone money and they repaid it with no interest, you need not report it on your 1040.
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