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Phillip B, EA
Phillip B, EA, Enrolled Agent
Category: Tax
Satisfied Customers: 704
Experience:  Practicing since 2004. Expert in 1040, small business, represent vs. IRS, & int'l tax mattters.
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tax question: I am the owner/landlord and spent $50,000 (as

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tax question: I am the owner/landlord and spent $50,000 (as a loan) to build out space for tenant's childcare center. An investor paid Tenant $50,000 to buy the all the shares and assets of the childcare center. The tenant then paid us $50,000. Should we claim $50,000 as an expense and then the $50,000 payment as income? How would the Tenant and investor show the $50,000 on their 1120 in any way?
Thanks for using! I will do my best to provide you with a clear and concise answer to your tax question based on the information that you have provided.

From my perspective of your end of the transaction, there was a loan (you paid 50k for the build) and repayment of the loan (the tenant paid you 50k from the investor). There would be nothing on the income tax return (other than interest income, if received) for you to report. If you have a corp or a partnership, the loan would be on your tax return's balance sheet if the loan took longer than a year to repay.

The tenant will depreciate the build out as a leasehold improvement over 15 years.

If there are additional questions or concerns, please reply to this answer so that I may assist you further. If this answers your question, please rate my performance between OK and Excellent service so that I may receive credit for my work. Thanks for your business.
Customer: replied 3 years ago.

The original tenant was bought out by the Investor. You mean Investor should depreciate the buildout? The $50,000 was his purchase price for the shares of the corp and its assets.


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