Arkansas Administrative Code
Agency 006 - Department of Finance and Administration
Division 05 - Division of Revenues
Regulation 1997-4 - Comprehensive Individual Income Tax Regulations
Rule 26-51-404 - GROSS INCOME GENERALLY
Rule 6.26-51-404(a)(1) - Notes of Indebtedness Used in Payment

Notes or other evidence of indebtedness received in payment for services and not merely as security for such payment constitutes income to the amount of their fair market value. The taxpayer receiving as compensation a note regarded as good for its face value at maturity, but not bearing interest, shall treat as income as of the time of receipt the fair discounted value of the note at such time. Thus, if it appears that such a note is or could be discounted on a six percent basis, the recipient shall include such note in his gross income as to the amount of its face value less discount computed at the prevailing rate for such transactions. If the payments due on a note so accounted for are made as they become due, they should be included as income in respect of such payment so much thereof as represent recovery of the discount originally deducted.