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yeah i am sure the landlord would gift him too just so he can avoid the taxes . ha ha ha ha and the landlord eats the write off too since he can't deduct the gift as an expense.
that was my feeling too. it is bad enough an owner has to pay anything out but to expect the owner to pay you in a way so you could committ tax evasion takes a pair.
a smart landlord should pay him cash and then turn him in to the irs the following year and collect the 10% reward . that would serve him good,
What is exactly the tax you are supposed to pay on a cash money received for free (so as a gift), and not for a service? And don't tell me there is a contractual agreement to leave the place because this is not the case and there is no VAT in this "transaction". I really don't see what tax you are supposed to pay here.
If anything, tax should be paid by the person giving money in this case, not the person receiving.
This is different than finding money in the streets, in which case you could own money to the IRS. But that's mainly because you cannot find the giver for tax purposes.
Is it money laundering if I had people write me checks of less than $10K and I paid them with the cash?
Your transaction is legal but you not reporting is the problem. You can't just appear with huge sum of cash out nowhere. They monitor and track money laundering. In addition if your account history spike and you had a ton of deposit in a short period it will be suspicious.
You should talk to a accountant and lawyer, any one worth hiring will consider your situation and offer free advice to see if they can help you.
You better off trying to classify the transaction in a way that is not taxable rather than get paid in cash because you have more problem if you get cash.
yeah i am sure the landlord would gift him too just so he can avoid the taxes . ha ha ha ha and the landlord eats the write off too since he can't deduct the gift as an expense.
great plan lol
Well the landlord is the one responsible for the taxes anyway. It is in his interests to give gift to each person instead of giving one big check because he's the one paying taxes.
So yeah, I think he's the one who will propose that to be able to avoid taxes.
For the person receiving, you just need to say that you received money from the landlord in the IRS filing and then the IRS will lookup the landlord's tax report to check that.
If it is not present => tax fraud for the landlord.
If it is reported => taxes above the $14K threshold.
Yeah I think it's pretty clear the landlord will be the one pushing for gifts...
What is exactly the tax you are supposed to pay on a cash money received for free (so as a gift), and not for a service? And don't tell me there is a contractual agreement to leave the place because this is not the case and there is no VAT in this "transaction". I really don't see what tax you are supposed to pay here.
If anything, tax should be paid by the person giving money in this case, not the person receiving.
This is different than finding money in the streets, in which case you could own money to the IRS. But that's mainly because you cannot find the giver for tax purposes.
money received for breaking a contract is taxable to the receiver.
as the owner i am paying the tenant to break our contract the same as i would charge him if he wanted to break it and move and we had a lease.
Well the landlord is the one responsible for the taxes anyway. It is in his interests to give gift to each person instead of giving one big check because he's the one paying taxes.
So yeah, I think he's the one who will propose that to be able to avoid taxes.
For the person receiving, you just need to say that you received money from the landlord in the IRS filing and then the IRS will lookup the landlord's tax report to check that.
If it is not present => tax fraud for the landlord.
If it is reported => taxes above the $14K threshold.
Yeah I think it's pretty clear the landlord will be the one pushing for gifts...
the landlord does not pay taxes on that money ,are you dreaming . as the owner it is an expense and comes off the profits that are taxable. that money is put on a 1099 and it is the tenants responsibilty to pay the taxes on it.
in our case that 100k we pay becomes part of our selling expense and gets added to our cost basis. our taxes on the sale are less the 100k.
because that item is put on a 1099-misc and reported as regular income as opposed to capital gains on a 1099-b which gets filed on a schedule d it stands out as a sore thumb when the tenant takes a 1099-misc item as a long term capital gain on schedule d and an audit is almost a given .
whether they accept it as a capital gain item or regular income item will be up to the irs examiner
Last edited by mathjak107; 03-18-2015 at 04:12 PM..
What is exactly the tax you are supposed to pay on a cash money received for free (so as a gift), and not for a service? And don't tell me there is a contractual agreement to leave the place because this is not the case and there is no VAT in this "transaction". I really don't see what tax you are supposed to pay here.
If anything, tax should be paid by the person giving money in this case, not the person receiving.
This is different than finding money in the streets, in which case you could own money to the IRS. But that's mainly because you cannot find the giver for tax purposes.
Your logic is flawed in that purchasing a RS leaseholder out of his rights is not "free". An asset is being purchased and sold which incurs some sort of tax liability same as if you sold a residence.
Sadly the IRS has been all over the issue regarding purchase of RS leases with conflicting rulings. One version puts such actions under the same as selling a primary residence, but there are others IIRC.
Make no mistake, this activity is not a *gift* by any standard meaning of the word. You have property (a RS lease with lifetime renewals by law that comes with inheritance rights for spouse, children and ohters), I want you to surrender that property and all claims/rights in lieu of payment. Such a transaction is *NOT* a gift. For one thing in order to fit that definition the person offering/giving funds would have not to receive any tangible benefit (like when your grandmamma gives you money on your birthday), and the receiver is not surrendering anything in consideration of such funds.
Well the landlord is the one responsible for the taxes anyway. It is in his interests to give gift to each person instead of giving one big check because he's the one paying taxes.
So yeah, I think he's the one who will propose that to be able to avoid taxes.
For the person receiving, you just need to say that you received money from the landlord in the IRS filing and then the IRS will lookup the landlord's tax report to check that.
If it is not present => tax fraud for the landlord.
If it is reported => taxes above the $14K threshold.
Yeah I think it's pretty clear the landlord will be the one pushing for gifts...
Your logic is flawed in that purchasing a RS leaseholder out of his rights is not "free". An asset is being purchased and sold which incurs some sort of tax liability same as if you sold a residence.
Sadly the IRS has been all over the issue regarding purchase of RS leases with conflicting rulings. One version puts such actions under the same as selling a primary residence, but there are others IIRC.
Make no mistake, this activity is not a *gift* by any standard meaning of the word. You have property (a RS lease with lifetime renewals by law that comes with inheritance rights for spouse, children and ohters), I want you to surrender that property and all claims/rights in lieu of payment. Such a transaction is *NOT* a gift. For one thing in order to fit that definition the person offering/giving funds would have not to receive any tangible benefit (like when your grandmamma gives you money on your birthday), and the receiver is not surrendering anything in consideration of such funds.
as i mentioned above there were only two private letter rulings on this . they are not general tax laws nor do they carry over to anyone else .
ruling one to the individual only said that it does not qualify for the capital gain exclusion a home does but that it could be considered a long term capital gain item.
the other ruling said no it does not qualify for the exclusion a home does and left it as a regular income item.
courts have not ruled on this at all to this point as general tax law.
but the 1099-misc we report it on vs being reported as a schedule d item is a certain red flag as 1099-misc indicates it is a regular income item. as opposed to a 1099-b
which indicarttes a capital gains item.
Last edited by mathjak107; 03-18-2015 at 04:09 PM..
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