Tax Treatment of Real Estate Liens

[RealEstateInvestor]

I financed a lien in the U.S. that is backed by a real estate property. I will receive income from the lien depending on how long it takes to get the funds back.

There is a risk that I can lose my money if the lendee doesn't pay back the money he owes and title to the land is proven not to be valid.

I have 2 questions:

1) How does the IRS treat such income...as capital gains? (i.e. there is a risk of loss).

2) For the tax amounts that I have to pay in the US, will those payments be credited to me on my Canadian tax return? Even if I am operating this as a sole proprietership (i.e. under my business name)?

Thanks to all who can help!

[RealEstateInvestor]

By the way, I am a Canadian citizen, Canada resident, visit the states about 2 weeks per year.