Dunno…sounds reasonable, but there are a million alternatives.
The $2.5k is the interest…on small deals ($250k or less in total payments), your characterization will probably not be challenged…on larger deals, final payment would be converted into interest over the life of the instrument…these are the “original issue discount rules”.
My corp is currently rehabing a house it plans to sell. My sister gave the corp $10k in exchange for an unsecured zero interest note for $12.5k, all due when the house sells (about 4 months). I plan to 1098 her for $2.5k interest at the end of the year.
Is this the best way to get money for my rehab deals?
Is she going to get hit with imputed interest since the note shows zero interest?
Does she fall under any of the lender laws?
Do I fall under any of the security laws?
As a practical matter this is probably all moot since neither of us is going to rat on the other, but I was just wondering.