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I am selling a note that I am carrying. The note will be ...

Customer Question
I am selling a note...
I am selling a note that I am carrying. The note will be discounted. Can I take this as a tax loss?
Submitted: 9 years ago.Category: Tax
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Answered in 3 minutes by:
6/3/2008
Tax Professional: Lev, Tax Advisor replied 9 years ago
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,141
Experience: Taxes, Immigration, Labor Relations
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Dear XXXXX,

Is that note with connection with financing the property you sold?

Or you loaned the money to someone?

 

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Customer reply replied 9 years ago
It is in connection with a property my former husband and I sold and then I received the note as property settlement.
Tax Professional: Lev, Tax Advisor replied 9 years ago

You will report selling the promissory note as selling the asset.

The question is what is your tax basis in the promissory note?

The IRS provides that the basis of property transferred to you or transferred in trust for your benefit by your spouse (or former spouse if the transfer is incident to divorce), is the same as your spouse's adjusted basis.

So you need to identify the original basis of the note. If the basis is the face value of the note - the answer is yes - you may report a capital loss.

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Lev
Lev
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