Need help on how to get paid

[Navid A.]

Hey BP,

I got wrapped into an informal partnership on a real estate flip project that we are about to sell after 3 months of rehab. We split the costs 50/50 and we are about to close soon. Since the partnership/deal wasn't under a LLC structure, I'm not sure what the proper way is to get paid from this deal. The property is under my partner's name and I technically don't have my name on anything. I paid my cut of the expenses directly from my personal account to his personal account. He wants to pay me directly upon close on the HUD and I'm not sure whether to take payment directly under my personal name or take payment using my existing LLC. I'm trying to mitigate my tax burden on this deal. Any advice?

[Basit Siddiqi]

@Navid A.

You can really do and say whatever you want on your tax return.

You mentioned this being a flip which is normally ordinary income subject to federal income tax, state income tax and self-employment taxes.

The difference between this option and the stcg is that the STCG would not be required to pay self-employment taxes. There is also the issue of having prior capital loss carryforwards and using them.

You can do and say whatever you want when you submit your tax return. The question is the return accurate?
Would the return be audited and would you be able to defend your position.

It looks like your accountant is looking for the route that pays the least tax to make you a happier customer. Will he be there to defend you or pay your penalties if you get audited?
You are also signing the return saying that the return is accurate.

Not to scare you, I am just saying the way it is.