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Offset flip gain with Promissory Note - NY
Hi All - Happy Wednesday, I had a quick question on how promissory notes work. I own 2 properties in Long Island, NY with a partner and originally decided to split the profit 50/50. Property 1 is for sale, while property 2 is still being worked on - I've decided to exit property 2 since it did not go to plan.
My partner and I agreed on a promissory note that will state I will be paid all profit from prop 1 and also funds from another prop that he solely owns once it sells - what tax implications will I face here. Will I be taxed for the sale of prop 1 even though it offsets my expenses for prop 2? My concern is I don't want to be taxed for prop 1 and then have to chase my partner for more money later on during tax season. All help is appreciated - thank you.