Tax consequences of Buying a discounted Promisory Note

[rajumail]

I am planing to buy a promisory note (secured by residential real estate)
at a discount (discount = $90K)

Original loan 200K
Purchase price of the note 110K
Property current value 130K


When I buy this note How will the IRS treat the discount amount of 90K ...which I will not be able to actually realize.

thanks
ham
rajumail@yahoo.com

[AnnAnderson1015]

I am not a CPA. But my guess would be that they will ask that you report your profit from the transaction. So if you brought it for $110k and the borrower ends up payment $150k, then you have made $40k less any expenses ( lawyer's fee, etc)