All Forum Posts by: Bill Walston

You've pretty much summed it up Kevin. The IRS treats a land contract as a sale. Should your 4797 show a loss, it is what it is.

Originally posted by Real Estate:

Hi,
I have a similar situation. I have a 1065 LLC and have a building that I bought for $60K and spent $40K on but have not sold it yet. Where do I report the Asset of $100K on the tax return for 2010? When I sell it in 2011 and file that tas return what form will I use also?

You may not have to report the asset at all. If total receipts for the year and total assets at the end of the year are below certain thresholds balance sheet items do not have to be reported. If your building does need to be reported it would appear on Schedule L, Balance Sheet Per Books.

Where the sale is reported will be determined by your "dealer status" in 2011.

Originally posted by Herbster:

How Much does it cost.

Hey Herbster:

Try $995 one time payment OR $587 x 2 pmts AND then $49 per month for the REI Matcher

Pat,

You should consult with your tax pro since he/she will be familiar with your tax status. Flippers do have to be concerned with the dealer status issue, as David mentioned.

That being said, if you are not a "dealer," as defined by the IRS you should report the sale of the property on Schedule D, Part I. The holding costs would be part of the basis of the property.

Originally posted by Larry Oringale:

I went and read a paper at http://www.mortgageassignmenttruth.com

I am not convinced that the MAPS is all it is cracked up to be.

Larry

Thanks for sharing Larry. The article was quite interesting. I agree with the author's major premise and most of his/her reasoning. It's been said before, MAPS is just a new twist to a technique that's been used for years. Indeed, it's not what it's "cracked up to be."

Originally posted by Jon Holdman:

Sounds like an old technique (subject to) with a new name.

Exactly! Much the same as "wholesaling lease options." :-)

I listened in on a webinar by Michael Kimbel and Phil Grove on MAPS (Mortgage Assignments). From what I can tell just by listening, this is nothing more than buying a property sub2 and assigning the contract to and end buyer. There was no mention of working with the lender in taking over the loan. I'm not sure why this is even called a mortgage assignment. I admit, I have not read the materials or reviewed the contracts so I may have missed something, but I don't think so.

Originally posted by Dave T:

In my opinion, filling in the pool is a major landscaping improvement not a repair

As much as I FAVOR Charles' idea that this is a "repairs and maintenance" item, my experience has been in line with Dave's. Since the property is being readied for rental use, Uncle Sam would expect that this be treated as a capital expenditure and included with land improvements.

Originally posted by Bryan Hancock:

Or do a 1031 exchange and save the 15%. What does paying taxes to our bloated gov-mint have to do with good conscience?

Bryan - I'm pretty sure that Tim meant that Bob could pay his 15% capital gains tax with a good conscience that he was correctly reporting the transaction. Don't read into his statement something that isn't there :-)

Originally posted by J Scott:

My *guess* is that this isn't something that would likely be noticed by the IRS unless/until there is an audit of a business....

Spot on J Scott. If a business tax return is audited a review of 1099 filings is standard. Currently, the 1099 is required if you pay an independent contractor $600 or more. HOWEVER, starting in 2012, the 1099 will function as a tax form for ALL business to business transactions. In a nutshell, you will have to issue 1099s whenever you do more than $600 of business with another entity in a year. This includes payments to corporations, which are exempt under current filing requirements.