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WebCPA
WebCPA, Tax Accountant
Category: Tax
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Experience:  Licensed CPA. 10+ years experience.
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Built a house with business partner, after the sale of the

Resolved Question:

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.
Submitted: 8 months ago.
Category: Tax
Expert:  WebCPA replied 8 months ago.
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, Tax Accountant
Category: Tax
Satisfied Customers: 110
Experience: Licensed CPA. 10+ years experience.
WebCPA and 6 other Tax Specialists are ready to help you

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