How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask WebCPA Your Own Question
WebCPA
WebCPA, Tax Accountant
Category: Tax
Satisfied Customers: 111
Experience:  Licensed CPA. 10+ years experience.
52706456
Type Your Tax Question Here...
WebCPA is online now
A new question is answered every 9 seconds

Built a house with business partner, after the sale of the

This answer was rated:

Built a house with business partner, after the sale of the house the net revenue was $14,978. Some of the personal expenses like interest and insurance were out of pocket and accounted for to arrive at the $14,978 taxable number.

The question is, with Partner A having $900 dollars in personal expenses and Partner B having $3,473 in personal expenses, (both looking to recoup those expenses then split the rest) what is the figure for each person on their Schedule C?

The debate is whether it should be $10,062 and $4916 versus $8,775.50 and $6,202.50.
Welcome and thank you for your question. I'll do my best to provide an informative answer. Please let me know if you need any clarification.

As it stands now, Partner A owes Partner B $1,286.50 [(3473-900)/2]. If A pays this to B, each Schedule C will report the same profit of $7,489.
If A does not reimburse B:
Partner A will show a profit of $6202.50, and Partner B will show a profit of $8775.50.
(14978-900-3473)/2 = 10,605 total profit excluding out-of-pocket expenses.
10605/2+900= Partner A profit
10605/2+3473= Partner B profit
WebCPA and other Tax Specialists are ready to help you