If an employee accepts a promissory note that is negotiable and is remuneration for employment, the payment is wages. The face value of the note on the date it is given to the employee is the amount used as wages.

If an employee accepts a promissory note that is non-negotiable and is remuneration for employment, the payment is also wages if it is given and accepted as unconditional payment for services. The fair market value of the non-negotiable note must be determined.

Determine the fair market value of a promissory note by using the discount value of similar notes issued by the employer at or about the same time as the note in question, and bought by banks or other commercial credit institutions.

If the notes were not traded on any market:

• •

  contact two banks or commercial credit institutions who are familiar with the employer, and

• •

  obtain signed statements of opinion from the two contacts about the discount value of the note at the time of payment.