It can get tricky quickly. Imo there are two solutions here. First option is to count it as income that then gets written off as a business expense. Second is t

It can get tricky quickly. Imo there are two solutions here. First option is to count it as income that then gets written off as a business expense. Second is to flesh out what fully collateralized means to better express it as an alternative to selling something. I think the first option makes sense. There are many scenarios where businesses will take fully collateralized loans and then reinvest the proceeds, that shouldn't be taxed. But if the loans are just turned into profit they should be.