Selling Gas Station - Question (Help Needed)
Member since 2024 · 5 posts · 1 vote
Hi All
We are selling our gas station/property and provided the buyer with the past 3 years business tax returns and are doing an inspection, but I received an email form the buyer saying their banker is asking for my Schedule E, why would they need my Schedule E for the loan? .
We are in the due diligence period and I haven't sold a property before so I appreciate the help.
What business structure is your gas station in (LLC, S-Corp, etc)? Do you file a separate return for that entity or does it flow through to your Schedule C. The E will tell you 2 things...it covers rental property and what entities flow through to your tax return. The latter is really none of their business, but it sounds as if they think you are renting out the property to another entity. Do you have an entity that owns the property and another that owns the gas station business itself? Does the station rent from you or another entity that you might own. There are a myriad of reasons that they might ask for it, but I would need to know more to answer your question correctly.
What business structure is your gas station in (LLC, S-Corp, etc)? Do you file a separate return for that entity or does it flow through to your Schedule C. The E will tell you 2 things...it covers rental property and what entities flow through to your tax return. The latter is really none of their business, but it sounds as if they think you are renting out the property to another entity. Do you have an entity that owns the property and another that owns the gas station business itself? Does the station rent from you or another entity that you might own. There are a myriad of reasons that they might ask for it, but I would need to know more to answer your question correctly.
"Do you have an entity that owns the property and another that owns the gas station business itself? Does the station rent from you or another entity that you might own."
Yes. The gas station/property is an LLC that I own. It rents from the business operating on the property which is another entity I own as well(Corporation). It is an S-Corp. I have on my schedule E that I receive rental income from it.
I file business returns for that business entity which I have submitted for the past 3 years and now they just asked for the schedule e for the past 3 years as well.
They told us it's for their banker but not sure as I havent had experience before selling, this is our first family property to sell so I just am wondering.
are they getting an sba loan ?
are they getting an sba loan ?
No idea. We didn’t ask form where, they just told us they’re working with their lender.
What business structure is your gas station in (LLC, S-Corp, etc)? Do you file a separate return for that entity or does it flow through to your Schedule C. The E will tell you 2 things...it covers rental property and what entities flow through to your tax return. The latter is really none of their business, but it sounds as if they think you are renting out the property to another entity. Do you have an entity that owns the property and another that owns the gas station business itself? Does the station rent from you or another entity that you might own. There are a myriad of reasons that they might ask for it, but I would need to know more to answer your question correctly.
"Do you have an entity that owns the property and another that owns the gas station business itself? Does the station rent from you or another entity that you might own."
Yes. The gas station/property is an LLC that I own. It rents from the business operating on the property which is another entity I own as well(Corporation). It is an S-Corp. I have on my schedule E that I receive rental income from it.
I file business returns for that business entity which I have submitted for the past 3 years and now they just asked for the schedule e for the past 3 years as well.
They told us it's for their banker but not sure as I havent had experience before selling, this is our first family property to sell so I just am wondering.
That's what suspected. Yep, they will need the Schedule E to properly cash flow the loan. There is currently common ownership of the entities that own the property and business, so they will need to sort the cash flow between the two out. The schedule E not only shows the common ownership, but it shows the rent that station pays.
What business structure is your gas station in (LLC, S-Corp, etc)? Do you file a separate return for that entity or does it flow through to your Schedule C. The E will tell you 2 things...it covers rental property and what entities flow through to your tax return. The latter is really none of their business, but it sounds as if they think you are renting out the property to another entity. Do you have an entity that owns the property and another that owns the gas station business itself? Does the station rent from you or another entity that you might own. There are a myriad of reasons that they might ask for it, but I would need to know more to answer your question correctly.
"Do you have an entity that owns the property and another that owns the gas station business itself? Does the station rent from you or another entity that you might own."
Yes. The gas station/property is an LLC that I own. It rents from the business operating on the property which is another entity I own as well(Corporation). It is an S-Corp. I have on my schedule E that I receive rental income from it.
I file business returns for that business entity which I have submitted for the past 3 years and now they just asked for the schedule e for the past 3 years as well.
They told us it's for their banker but not sure as I havent had experience before selling, this is our first family property to sell so I just am wondering.
That's what suspected. Yep, they will need the Schedule E to properly cash flow the loan. There is currently common ownership of the entities that own the property and business, so they will need to sort the cash flow between the two out. The schedule E not only shows the common ownership, but it shows the rent that station pays.
Would the bank need this or the buyers? Because they know the sales already and they are familiar to the gas station property business. They didn’t ask us for this info from the start just wondering why now
are they getting an sba loan ?
No idea. We didn’t ask form where, they just told us they’re working with their lender.
A lender doing a business loan can most definitely request those items
What business structure is your gas station in (LLC, S-Corp, etc)? Do you file a separate return for that entity or does it flow through to your Schedule C. The E will tell you 2 things...it covers rental property and what entities flow through to your tax return. The latter is really none of their business, but it sounds as if they think you are renting out the property to another entity. Do you have an entity that owns the property and another that owns the gas station business itself? Does the station rent from you or another entity that you might own. There are a myriad of reasons that they might ask for it, but I would need to know more to answer your question correctly.
"Do you have an entity that owns the property and another that owns the gas station business itself? Does the station rent from you or another entity that you might own."
Yes. The gas station/property is an LLC that I own. It rents from the business operating on the property which is another entity I own as well(Corporation). It is an S-Corp. I have on my schedule E that I receive rental income from it.
I file business returns for that business entity which I have submitted for the past 3 years and now they just asked for the schedule e for the past 3 years as well.
They told us it's for their banker but not sure as I havent had experience before selling, this is our first family property to sell so I just am wondering.
That's what suspected. Yep, they will need the Schedule E to properly cash flow the loan. There is currently common ownership of the entities that own the property and business, so they will need to sort the cash flow between the two out. The schedule E not only shows the common ownership, but it shows the rent that station pays.
Would the bank need this or the buyers? Because they know the sales already and they are familiar to the gas station property business. They didn’t ask us for this info from the start just wondering why now
The lender is going to want to see it.