Interest Received From Contract For Deed Reporting
my partnership LLC has sold multiple properties last year on contract. We have elected to do installment sales. We file a 1065 for the partnership every year. How do I report interest received from the contracts? If it is not portfolio interest income what is it?
Yes, the whole profit is accounted even though you did not receive the money. Except, if the property is land in which case only the received amount is taxable this year.
real_estate_now,
Dealer disposition profit is taxable in full in the year of sale, even for raw land.
Thanks for the responses. I think I need to move some expenses to offset this new ordinary income.
Thanks guys..
Carrying costs would be minimal for me as long as i find another like property for around 100k as I would be able to pay cash for it...
On the other hand, If I cant find a like property and do a 1031 Exchange, taxes will eat into my capital pretty good and I might be limited to around 60 - 70k for my next flip..
Decisions decisions..
--Mike
Quote:
On 2011-05-17 18:44, Jnzy111 wrote:
If I cant find a like property and do a 1031 Exchange, taxes will eat into my capital pretty good and I might be limited to around 60 - 70k for my next flip.Mike,
You really need to have a tax advisor on your team. Profit from the sale of your flip property is ordinary income and the tax on that income can not be deferred in a 1031 exchange. A 1031 exchange defers capital gains taxes, not ordinary income taxes and not the self-employment income taxes that are also due when you are flipping property.
Flip property does not qualify for 1031 exchange participation as the relinquished property nor as the replacement property.[ Edited by NewKidInTown3 on Date 05/18/2011 ]
Additional information that I found... Putting the pieces together, tenants will file 1099s on landlords to the IRS? From the text I have seen, this change looks like a high probability of being implemented.
From http://www.treas.gov/offices/management/budget/budget-documents/cj/08/12_IRS_CJ_GTG.pdf
"In the Administration’s proposal, the IRS anticipates receiving an additional 89 to 177 million information returns as a result of the new reporting requirements. The costs associated with implementation of this program are for reprogramming affected information technology systems. Once these initial costs have been incurred, subsequent costs will decrease as processing, transcription, and matching activities will occur largely within existing workgroups.
Information Reporting on Payments to Corporations:
Underreporting of income where there is little or no information reporting contributes to approximately 53.9 percent of the underreporting portion of the tax gap. Under current law, businesses are not required to issue Forms 1099 for services provided by corporations. Although the reporting requirements for corporations could be expanded by changing the regulations, Treasury recommends it be changed legislatively.
Implementation of this proposal will increase the number of Forms 1099 filed. Voluntary compliance is expected to increase for corporate reporting of 1099 amounts. The IRS would require additional resources to implement matching programs to address the increased volume of Forms 1099."
ITBinvestor wrote: Additional information that I found... Putting the pieces together, tenants will file 1099s on landlords to the IRS? From the text I have seen, this change looks like a high probability of being implemented.
I was just wondering. If the LL can’t get the tenants to pay rent how is the IRS going to get them to file a 1099. Are they offering an incentive or paying them to do so. Seems like the guy up front is paying everyone and spending all our money. If they are giving money away for sending in a 1099 can I send one in on myself (smile)
I understand the current law. The point of the post was to get information on the changes they are proposing.
Starting a thread by making a statement of fact that is not true just destroys your credibility. If you are not credible, how can anyone take anything you say seriously?
What are you talking about?
Rent in tenancy law includes any money, goods or services, or anything else of value which is paid or supplied under a tenancy agreement, either written or verbal, by the tenant.
Rent does not include any money paid or owing as a bond. Rent is normally the money paid by the tenant for the right to live in a property. But rent may include any goods or services charged for this right.