Taking property or a home in lieu of cash payment, for $1K?
I've been doing property development for a few years and I've rolled each project into the next. I've never taken much income out of the project. This next year that needs to end and I plan to start receiving something back.
The following numbers are fake numbers, but I'm trying explain my situation. Put an extra few zero's and you'll get what I trying to do.
My original investment: $4K
Total that I'll get back next year: $20K
So, I'd have to pay income on the $16K at regular income. I'd like not to do that.
If instead of $16K, I take ownership of buildable lots. Lets say the lots are worth $4K each, but the properties transfer to me with a very minimal value. I hold the 4 lots for a year and day, sell them for $4K and pay the long term gain instead of short-term gain.
I would end up with 4 lots sold in a year that I'd get 16K out of. If I went ahead and built on them, I could stretch this out even further and 1031 them until I'm ready to pay taxes. I'm not trying to get out of taxes (except the short-term ones).
Is that ok to do?