If you are receiving the promissory interest, enter it as if you received form 1099-INT. In the Received from box, you may enter Promissory Note Interest Income and the name/SSN, if you have it.
See
Where do I enter Form 1099-INT?
If you are paying the promissory interest and this is a personal loan, you can't deduct the interest. According to the IRS, only a few categories of interest payments are tax-deductible:
- Interest on home loans (including mortgages and home equity loans)
- Interest on outstanding student loans
- Interest on money borrowed to purchase investment property
- Interest as a business expense
All other interest is considered personal interest, which includes interest charged on credit cards, auto loans, unpaid utility bills and late payment or underpayment of federal, state and local income taxes.
