Capital Gains Or Income?

Hi all,



I purchased some mortgage notes at steep discounts, and within the year, a few of the notes paid off, leaving me with several thousand dollars in profit. I did this through a single member LLC.



One CPA says the profit should be taxed as income, another CPA says the profit should be taxed as capital gains.



I would love some input as to which is correct, and why.



Thanks in advance!!



Amanda

Comments(4)

  • NewKidInTown319th March, 2006

    What is the business purpose for your LLC?

  • AmandaG20th March, 2006

    The business purpose is ideally to limit liability, and keep the notes out of my own name.

  • InActive_Account20th March, 2006

    It seems to me that your business activity produced ordinary income.

  • AmandaG22nd March, 2006

    Thanks, NewKid.

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