Private Loan Tax question

[Matt F.]

Can anyone explain how private loan from relative or close friend works from a tax standpoint. For example if I were to barrow from a parent and I make interest only payments to them for the loan period. Do I simply issue them a 1099 int for the interest paid during the year? And I would then be able to deduct my interest expense ? We'd draft a simple note explaining terms and all that but I couldn't wrap my arms around the tax implications. Anyone have experience with this before? Thanks!