Our installment note has only a token interest rate. Can the IRS force part of the payment to be treated as interest anyway?
I am from Singapore and sold digital assets from a U.S. business to a buyer who wanted a very low stated interest rate so the annual payments would be easier to manage. The principal balance is $250,000 over three years. My first thought was that low interest would simply mean more capital gain and less interest income.
Now I am hearing that the tax law may impute interest even if the contract does not say much. If that is correct, I want to understand whether the IRS can recharacterize part of the stated principal as interest before I report the first year's payments.
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