Tax question related to note purchase

[Joseph Skoler]

I really need help making the best tax situation here.

I bought a note (owner in my name) from a bank at a discount.  For ease of analysis, lets say I paid $10,000 on a note with a balance due of $100,000.

I then bought the deed to the property in an LLC of mine. Again for ease, lets say I paid $20,000.

The public records (tax forms completed at closing) show that I paid $120,000 because they require the buyer to total the price for the property plus any current mortgage debt.

Can I properly say that my tax basis (for depreciation purposes) is $120,000?

Thank you!

[Wayne Brooks]

Your basis in the property is simply what you paid for it.  Your basis in the note is simply what you paid for it.  No tricks or convoluted thinking changes that.