Users like you can add images, links and other relevant information about this topic.
posted: Mar. 31, 2009 @ 6:43p
Quick Summary is created and edited by users like you... Add FAQ's, Links and other Relevant Information by clicking the edit button in the lower right hand corner of this message.
Click to copy code and go to .
posted: Mar. 31, 2009 @ 7:56p
generalya said: Is interest deductible on a promissory note? if I loaned X amount of money from a person, and that person charged me say $200 as interest? Thanks Not unless you can trace the proceeds of the loan directly to a business expense or to a taxable investment. Or unless the loan is secured by a properly recorded mortgage (or similar) on a qualified residence.
posted: Mar. 31, 2009 @ 9:19p
Loan was for another loan out to someone else with a higher interst rate. So it can be traced to a business income. Can the loan be considered as business expense?
Senior Member - 5K
posted: Mar. 31, 2009 @ 9:26p
generalya said: Loan was for another loan out to someone else with a higher interst rate. So it can be traced to a business income. Can the loan be considered as business expense?Are you reporting the interest income for the other loan?
posted: Mar. 31, 2009 @ 11:38p
Senior Member - 4K
posted: Apr. 1, 2009 @ 12:09a
generalya said: YesIt is going to be investment interest expense then. See form 4952.
posted: Apr. 1, 2009 @ 2:16a
theman2 said: It is going to be investment interest expense then. See form 4952.You are taking generalya's word that the proceeds can be traced, which is possible but not necessarily true, but not taking his word that the lending is a business (which does seem unlikely)?
Senior Member - 4K
posted: Apr. 1, 2009 @ 10:15a
LH2004 said: theman2 said: It is going to be investment interest expense then. See form 4952.You are taking generalya's word that the proceeds can be traced, which is possible but not necessarily true, but not taking his word that the lending is a business (which does seem unlikely)?thanks for fixing my typos
I have yet to see an individual tax return where a taxpayer is 'in the business of lending' where the income and expenses are reported on a sch C. I suppose it would be possible if OP is running a payday loan shop or some other really obscure scenario.
If OP has a loan secured by real property in a state where he is not a resident, it is possible that he has a filing requirement (and may owe tax) in the non-resident state since the interest income associated with the loan is sourced to that state.
Everyone of FWF loves the idea that, if you get a business credit card, form an LLC, or something else random, that you can turn your investment income into business income and deduct all your expenses on Sch C/1065/1120/etc. It doesn't work that way. Investment expenses are deductible on Sch A. If you don't have enough deductions to itemize (or don't have enough to 2% misc deductions to actually use any of them), you are not going to be able to deduct the expenses.
But yeah, I guess I'm taking OP's word that the proceeds from the loan can be traced.
Disclaimer: By providing links to other sites, FatWallet.com does not guarantee, approve or endorse the information or products available at these sites, nor does a link indicate any association with or endorsement by the linked site to FatWallet.com.
Members of our community may attach files to a post in accordance with the User Agreement. FatWallet is not responsible for the content, accuracy, completeness or validity of any information contained in any attached file. Files have *not* been scanned for viruses. Be especially wary of Excel files which may contain malicious content.
Earn Cash Back while you shop - just 3 simple steps.
1. Sign Up so we know who to pay! (It's FREE.)
2. Shop through FatWallet for deals from your favorite stores. Your online purchases earn Cash Back that builds in your FatWallet account.
3. Get Paid by requesting a payment via check or PayPal.
FatWallet coupons help you save more when shopping online. Use our Coupons Search to browse coupons and offers from thousands of stores, gathered into one convenient location.
As part of our FatWallet Community, you can share deals with almost a million shoppers in our forums. Forum content is generated by consumers for consumers. Share deals, money-saving tips, and more. It's FREE, fun, and addicting.
Our customer experience team is here around the clock - real people ready to assist.