Tax

Have a Tax Question? Ask a Tax Expert

Ask an Expert,
Get an Answer ASAP!

Tax

Bought a rental... rented it. decided to tear it down

Customer Question
hi... bought a rental... rented...
hi... bought a rental... rented it. decided to tear it down and rebuild with a partner
JA: Thanks. Can you give me any more details about your issue?
Customer: He is managing construction and money is going to him. he will buy the property the end for what i have in it (land, money paid to him for construction) and a profit for me. How do i record (for taxes) the cost that went to him?
JA: OK got it. Last thing — Tax Professionals generally expect a deposit of about $32 to help with your type of question (you only pay if satisfied). Now I'm going to take you to a page to place a secure deposit with JustAnswer. Don't worry, this chat is saved. After that, we will finish helping you.
Submitted: 1 year ago.Category: Tax
Show More
Show Less
Ask Your Own Tax Question
Answered in 7 minutes by:
4/12/2016
Tax Professional: Lev, Tax Advisor replied 1 year ago
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,141
Experience: Taxes, Immigration, Labor Relations
Verified
If that is a partnership - it is a separate legal entity.If there is a partnership - that partnership MUST file the tax return - form 1065 and should issue K1 forms to each partner.A partnership is the relationship existing between two or more persons/entities who join to carry on a trade or business. Each person/entity contributes money, property, labor or skill, and expects to share in the profits and losses of the business.Partnership should issue schedules K-1 to each partner reporting pro-rata share of net taxable income (or loss) -http://www.irs.gov/pub/irs-pdf/f1065sk1.pdfSome additional information about partnerships may be found in IRS Publication 541 -http://www.irs.gov/publications/p541/index.html.Then - if there are two partners - each will receive K1 form - and will use information from that form to prepare your individual tax return.Questions?
Ask Your Own Tax Question
Customer reply replied 1 year ago
it is not a "partnership". We just wrote a written agreement between our two sole LLC's on how the deal/transaction will work. Since we are separate, I am paying him half the costs, and he is paying the contractors... how do i account for the money i paid him?
Tax Professional: Lev, Tax Advisor replied 1 year ago
Indeed - if each LLC runs separate activity - that would be perfectly fine.But because there is an agreement between LLCs - how to contribute funds and properties and how to divide a profit - that is a partnership and each LLC is a partner.You would need to account for all you pay as your contribution into the partnership and the partnership as a separate entity will file the tax return deducting expenses - and will issue K1 to each LLC (partner)
Ask Your Own Tax Question
Customer reply replied 1 year ago
Isn't there another way to do it? I don't think the intent was to form a partnership, nor do we want to file taxes as partners.
Customer reply replied 1 year ago
i looked at the K1 form. you have to be set up as partnership. We are not.
Customer reply replied 1 year ago
However, a joint undertaking merely to share expenses is not a partnership.
Customer reply replied 1 year ago
from the irs publication
Tax Professional: Lev, Tax Advisor replied 1 year ago
Another way woudl be if you run the entire activity and hire another LLC as a subcontractor to do the service for you.Then - each will run separate business activities and separately report his/her income and separately calculate the profit.You will issue 1099misc form to report payments you made to another LLC..
Ask Your Own Tax Question
Tax Professional: Lev, Tax Advisor replied 1 year ago
Another option is to construct a building that you will own jointly.In this case you may say that will share building costs.In this case all building costs you pay will be your capital investments - you just need to account the these - and total will be your basis in the property you will own...I appreciate if you take a moment to rate the answer.Experts are ONLY credited when answers are rated positively.If you still have any doubts, need clarification - please be sure to ask.I am here to help you with all tax related issues.
Ask Your Own Tax Question
Ask Lev Your Own Question
Lev
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,141
30,141 Satisfied Customers
Experience: Taxes, Immigration, Labor Relations

Lev is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,300 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,310 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

Robin D.

Robin D.

Senior Tax Advisor 4

13,695 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,651 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

R. Klein, EA

R. Klein, EA

Enrolled Agent

1,839 satisfied customers

Over 20 Years experience

< Previous | Next >

Related Tax Questions
Form 8300. We are doing a business to business transaction.
We are doing a business to business transaction. The form is not clear on how to compete. Do we complete Part I f … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
A piece of family property was placed into a partnership
A piece of family property was placed into a partnership with my 3 older siblings some time ago. Because my younger brother and I were minors at the time, we were not included in ownership. At this ti… read more
RD
RD
Self Employed
Master's Degree
1,164 satisfied customers
In a LLC partnership. Two partners equal partners. No
In a LLC partnership. Two partners equal partners. No employees. Each putting max into their SEP accounts. Does the contribution have come from the partnership cash account or their personal accounts.… read more
abci168
abci168
Principal
27 satisfied customers
Suppose my taxable income in 220,000 this year and the tax
Suppose my taxable income in 220,000 this year and the tax rate is X up to 200K, but Y for 200and over, do I pay Y on the full 220K or just that above 200K? … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Can I report rental income in my tax return on a property
Can I report rental income in my tax return on a property thar is owned by my father? He does not live in the US is not a US citizen and can sign a document to allow me to receive the rental… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,695 satisfied customers
2 Member LLC now 1 Member LLC. What forms to file to IRS? I
2 Member LLC now 1 Member LLC. What forms to file to IRS?I have an LLC that was Me and Member B. Member B has now left the LLC and sold his ownership to me for no consideration. I am now the sole owne… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,466 satisfied customers
Is a tax return less likely to be audited if it's prepared
Is a tax return less likely to be audited if it's prepared by a CPA or simply a tax person? Secondly, our Rotary Club is a 401 C for we have a 401 c 3 Foundation the question is can individual members… read more
socrateaser
socrateaser
1,031 satisfied customers
I am 50% partner in an LLC, taxed as partnership (form
I am 50% partner in an LLC, taxed as partnership (form 1065). The other 50% partner is my friend. This LLC's only assets were 2 single family houses, which we rented out. In 2016 we have sold both of … read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,695 satisfied customers
Adjusted individual tax return for 2014(Iowa),says no
Adjusted individual tax return for 2014(Iowa),says no response to letter of inquiry,disallowed health insurance. deduction.says my wife and I owe$600.00.she called # and was told to show proof of insu… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
My LLC partnership K-1 form shows nothing in Box 19 and
My LLC partnership K-1 form shows nothing in Box 19 and shows $$$ in box 14 A and C. I have no problem with that, but when trying to refinance my home the bank refused to consider the business income … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
A Form 1065 partnership return is being prepared for a
A Form 1065 partnership return is being prepared for a partnership whose General Partner is a single member LLC. In the Analysis of Net Income (Loss) section at the top of page 5, is the LLC's portion… read more
taxmanrog
taxmanrog
Master\u0027s Degree
698 satisfied customers
On a Partnership K-1, foreign income items are reported on
On a Partnership K-1, foreign income items are reported on Line 16, but in addition there is a separate schedule listing foreign currency gain, Subpart F income and qualified fund income under Sec 129… read more
abci168
abci168
Principal
27 satisfied customers
I am preparing a partnership tax return for 2016. The
I am preparing a partnership tax return for 2016. The partnership holds commercial rental property. one of the partners, 50%owner, passed away in April 2016 and left his interest to his spouse. i woul… read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
A Nevada partnership (LLC form in Nevada) own property in
A Nevada partnership (LLC form in Nevada) own property in Nevada. in 2016, the partnership hire a manager in California to manage Nevada rental property (this manager is show on the Nevada Secretary s… read more
Lev
Lev
Tax Advisor
30,141 satisfied customers
Undistributed taxable income previously taxed. Have 3
Undistributed taxable income previously taxed. Have 3 shareholders with balances due to them from previous years. Can it be paid all in one year to bring their amounts owing to zero until the next pro… read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,217 satisfied customers
I have a few LLC's that I am preparing tax returns for. They
Hello, I have a few LLC's that I am preparing tax returns for. They are all related to real estate and are owned by my husband and me, but I have them structures as multimember LLCs and do separate ta… read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,217 satisfied customers
Is a tax refund on a decedent's individual tax return
is a tax refund on a decedent's individual tax return includible in the decedent's estate (Form 706) AND/OR the decedent's estate income tax return (Form 1041)? … read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
727 satisfied customers
I am preparing a tax return for a partnership. It is an LLC
Hello,I am preparing a tax return for a partnership. It is an LLC that is husband and wife (70/30 split) with a handful of small non-investor partners. This couple earned far more in 2016 than in prev… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x