Promissory Note- What Is It?

[ursosweet]

Hi Folks

I Recently Recd. A Employment Contract From A Medical Group. They Have Agreed To Loan Me An Amt. Towards My Tail From My Current Employer. The Amt Is Payable At The Time Of Joining. However They Want Me To Sign The Promissory Note Which States That I Am Liable To Pay Them Back. My Dilemna Is, Should I Tell Them That I Will Only Sign This When I Have Recd. The Loan, Or It Can Be Signed Even Though I Have Not Recd. The Loan Amt.
Thanks

 

[hadron]

Hi Folks

I Recently Recd. A Employment Contract From A Medical Group. They Have Agreed To Loan Me An Amt. Towards My Tail From My Current Employer. The Amt Is Payable At The Time Of Joining. However They Want Me To Sign The Promissory Note Which States That I Am Liable To Pay Them Back. My Dilemna Is, Should I Tell Them That I Will Only Sign This When I Have Recd. The Loan, Or It Can Be Signed Even Though I Have Not Recd. The Loan Amt.
Thanks

The promissory note only takes effect if the 'loan giver' actually hands over the money (at least that is my understanding, again read my disclaimer). It is the same with a home mortage, you only become liable to pay back the money if the mortgage company actually paid the seller of the house.

Have your attorney/CPA look into the tax implications of this. It might be possible for the group to forgive you the loan piecemeal and write it off as a business expense or some other mechanism that keeps this pre-tax money.

Promissory Note- What Is It?

http://en.wikipedia.org/wiki/Promissory_note

 

[ursosweet]

thanks

thanks hadron....that was what i was looking for- can i sign it before the amt. is paid.
Also it seems they are willing t forgive the loan picemeal, on the condition i stay with them for three years!!

also if someone has any reviews abt. the lawyer- Rahul Reddy from texas.
thanks again

 

[hadron]

Also it seems they are willing t forgive the loan picemeal, on the condition i stay with them for three years!!

Make sure to figure out how this will be treated tax wise. There is a chance that they will issue you a 1099 every time they forgive a portion of the loan. If they do that, you have to pay taxes on the portion they forgive. If they can do it legally tax-wise that they run this forgiveness as some sort of business expense, you might not have to pay taxes on it. (buying the tail btw. might be something you can deduct as a business related expense on your personal tax return, but this is far beyond my area of expertise)

 

[hadron]

thanks hadron....that was what i was looking for- can i sign it before the amt. is paid.

I believe you can, but this certainly depends on the wording on the note. But in most of these 'cash for note' transaction you don't owe someone money if they didn't give it to you in the first place.