Posted by Bill Bronchick on July 27, 2004 at 10:17:00:
The title company will report the transaction on a 1099s as “gross proceeds” to the IRS. The seller must report the sale to reflect the substance of the transaction, which means sales price, less basis and sales costs. The $20k to Bob can clearly be justified as a “broker fee” and as part of the sales cost.
Assignment Fee & Tax liability - Posted by Daniel
Posted by Daniel on July 26, 2004 at 15:06:15:
Here is the scenario:
Company XYZ offers to purchase real estate from “Bob” for $80k. His offer allows him to assign the contract for a higher price to a 3rd party “Jim”. Company XYZ then assigns the contract to Jim, but for $100k, and collects a fee from Bob for $20k. This is paid from the title company, and is on the HUD statement.
Question: Is Bob liable for taxes on the extra 20k even though he never received it?