Note investor; I bought a note; a promissory note for $NN, pays me principal and interest.

[curt504]

What form to declare I bought a note / promissory note?   IE as a note investor.

Presumably that form also takes the interest and principal I recieved in 2023.

tnx curt

[MonikaK1]

If you received interest income from the note in 2023, if using TurboTax Online, go to Federal, Wages & Income, and select Investments and Savings. Select Interest and choose to type in the information yourself.

Even if you were paid directly by the borrower and didn't receive a Form 1099-INT from a financial institution, enter the interest income in the Form 1099-INT section. See this help article for more information. 

If you were to sell the note, then you would need to report it as the sale of investment property in the year it is sold. You don't need to report the purchase of the note, but you would include the information about the purchase when you report the sale.

See this help article for the steps to enter the sale of an investment in TurboTax.

[curt504]

Notes receive principal and interest.  Just like an installment sale.

Where/how do I report my basis (guessing at this term) of the note as I receive principal?

Notes also can foreclose as this one is in the process of.   I paid say $50k for the note,  I foreclose, have legal expenses,  get back either cash at the auction or the house.  I'd have the house appraised to set what gain or loss.

You saying 4797 or 8949 to report the complete transaction;  buy, return of principal, sale?

tnx curt

[MonikaK1]

You don't need to report the principal on the investment note as you receive it. You will just report the interest income while you hold the note.

The tax consequences of a foreclosure will depend on the final outcome and the expenses incurred. You could end up with a gain or a loss, or a restructured debt.

This article from This Matter addresses the tax consequences of foreclosure to the lender.