Trustee’s resp. on sales of sub-2 home - Posted by JT-IN
Posted by JT-IN on April 01, 2005 at 11:33:26:
Ryan:
The solution for the responsibility of the distribution of proceeds from closing is to provide the Escrow Co a SSN or TID for the Trust. As long as they have a number to include on a Form 1099, that relieves them and fulfills their responsibility. Most folks would use their own SSN, and that ends that.
Your second question involving the Seller handling funds and then executing a promisory note and negotiating funds to you, seems to make the process way too cumbersome… and would lead to seller trouble, before long. It is advisable to keep the knowledge of all this business of resale and closing out of their presense, or else you soon have a person saying, “That should be my money”.
You should have executed a POA at the time that you took the property subj to, on behalf of the seller, which authorizes you to handle any business as it relates to the property. That ends all communication and dealings with the Seller, and any chance for an eruption of emotions, leading to further problems…
Your tax liability should be determined by the amount you received, less any deductible business expenses. An attempt to shield this income from view, by running the transaction through the Sellers name, is a formula for disaster, IMO. This reminds me of an article that I read in this mornings newpaper… Three RE investors pleading guilty to Bank Fraud and Tax Evasion… I think they are all going to Prison. You think about it decide if saving a few dollars on taxes is worth that risk…?
What you need to decide is if you plan on being around this business very long… If so, then I advise you to make a habit, from day one, to do things the right way. God knows that there are enough traps and mine fileds for those that are attempting to be squeky clean, compared to those that aren’t, and will run aground sooner or later.
Just the way that I view things…
JT-IN