 The very structure of the note encourages the investor to reinvest the full face value for additional tax savings if another note is available for investment.In the U.S., this tax saving strategy is accomplished by what is known as a 1031 Exchange.The IRS allows the investor to defer payment of any taxes on the profit made on the “second hand” (in the case of the above example, that would be $10,000) indefinitely into the future if the investor “exchanges” the investment for a similar one, which, in practice, means that the investor could buy another clap note with a face value of $111,111, thus instantly saving about $3,300 in taxes and simultaneously making another $11,111 in profit on his original investment of $90,000.