Posted by Bud Branstetter on June 03, 2000 at 18:16:19:
Bill is an attorney not a CPA. I’m sure he knows from experience but will he feel free to comment on a tax issue. Since I’m not an attorney nor a CPA I can say most anything I want. The less than face value is not a loss if done in the same year. The difference would wash on the same return. If a dealer corp or individual has reported all of their gain in one tax year and later sell that note at a discount to their basis in it, then they can report it as a “loss”. The details are in some of the instruction on the IRS tax forms.
I am aware a number of people do such to try and avoid the ban on installment sales by dealers. The IRS may look at it as a device to avoid the proper taxes. I would much rather sell the note to a third party who may in turn sell, rent, or discount a note or property to me in turn.