Why would the promissory note not be treated as a valid means of payment?
A. The facts concerning the promissory note aspect of such promotions demonstrate that actual payment of the note is never intended. Purchasers are told (1) another company will pay the note in exchange for advertising on the purchaser’s Web site; (2) the note can be paid at a rate of $2.00 per click on the purchaser’s Web site, encouraging the purchaser to repeatedly click on his own account (using his PIN number) to eventually full pay the note; (3) the note holder will later forgive the note; and (4) the note can be paid by making referrals to the promotion’s marketer. As a result, there is no possibility that a purchaser will ever be required to pay the note and such note is considered to be invalid. Q. I was told that purchase of the Web site entitled me to deduct certain amounts as business expenses on my tax return. Are these business expense deductions available, even if the credit is not? A. Because virtual mall Web sites are not a valid business (i.e., have no economic substa
