Tax Consult Needed for Flip Closing on Tuesday!

Tax, SDIRAs & Cost Segregation
7yFollow

Tax Consult Needed for Flip Closing on Tuesday!

Chelsea Ross
Member since 2017 · 7 posts · 2 votes

I am closing (selling) my first flip on Tuesday. I purchased the SC property though a NC based LLC. The closing attorney sent me a SC Transferor Affidavit Tax Lien Inapplicable form to fill out, for which I must either declare that the assets being transferred are not business assets, OR that less than a majority of the business assets are being transferred. Neither of which I feel like are true. She does not seem to think the LLC would be considered a business but told me to contact a tax professional. I don't even see why it's necessary since they will be with holding taxes for the sale.

Does anyone know of a tax professional that could do a quick, last minute consult for me so I can figure out which tax documents I need to sign to get to the closing table? I don't have one that I work with regularly since this was my first one and I haven't even sold it yet. Does anyone have experience with this?

0Reply
9 views

4 Replies

Jump to latestLatest
  • Eamonn McElroy
    Accountant · Atlanta, GA · Member since 2015 · 1k+ posts · 1k+ votes
    7y

    You didn't mention where you are located Chelsea.

    If you are located in the Carolinas, you may want to reach out to @Natalie Kolodij and see if she can fit you in.

    A turnaround of 24 hours on a new client consult is a bit of a tall order and falls into that "quick, cheap, quality -- pick two out of three" paradigm.  Most tax CPAs don't work weekends outside of "busy season" so that leaves only Monday...wishing you the best.

    0Reply
  • Chelsea Ross
    OP
    Member since 2017 · 7 posts · 2 votes
    7y

    Thank you @Eamonn McElroy. I'll reach out. I think the question came down to whether a single member LLC that is a disregarded entity is considered a business for tax purposes or not. Hopefully I can find someone to answer this quick question over the phone on Monday, though I think I found the answer here:

    https://www.thebalancesmb.com/disregarded-entity-definition-and-background-398223

    0Reply
  • Eamonn McElroy
    Accountant · Atlanta, GA · Member since 2015 · 1k+ posts · 1k+ votes
    7y

    I think you might be focusing too much on the "entity" aspect.  An entity doesn't modify whether or not your "activity" rises to the level of a "trade or business" in the eyes of the IRS.

    This looks like a rather pertinent article to read: https://letstalkdirtsc.com/tag...

    0Reply
  • Chelsea Ross
    OP
    Member since 2017 · 7 posts · 2 votes
    7y

    I found that resource as well. I'm struggling between the two statements:

    "We struggled with the definitions in the Internal Revenue Code and finally decided that unless a property is an owner-occupied single family residence, the closing attorney should consider that it might be a business asset."

    and 

    "The business type is separate from the individual for liability purposes, and the business is taxed through the individual's personal tax return, based on its net income on Schedule C."

    If the actions of the LLC will be taxed with my own individual taxes and not as a separate business, would the house be considered a business asset?

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free