Assigned owner contract interest question (deduction, guidelines, payments, bought)

[wrapn3]

We sold a building on owner contract and assigned part of that contract to cover expenses. The monthly payments are divided 2/3 to the assignee and 1/3 to us. We received the year end statement and it says we received all the interest! Is that really right? The interest for the whole year was $29,000 and we only received a little over $12,000 total P&I! Can't find any reference to this in our contract. Any help or advice would be appreciated

[jackmichigan]

If you didn't receive all of the interest then, of course, the year-end statement is not correct. Who prepared the statement? Did they have the tax i.d. number of the assignee?

[wrapn3]

There is a third party accounting firm that prepared it, the way they made it look we received all the money and then paid the mortgage company that bought part of the note

[SmartMoney]

You need to seek the advice of an accountant, but I've interpreted the guidelines as, if you don't pay, you don't get the deduction, if you get the income, you must declare it - so you either need to get an amended 1098 or you need to issue a 1099-INT to those that received a portion of the interest. (I am not a tax professional, so please verify this information) Either way, you will need the recipent's social, and you may need to get your own tax id if you issue the 1099-INT. There are online, fillable forms readily available on irs.gov or a simple google search.

[wrapn3]

Thanks that's a great thought!