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Updated over 13 years ago on . Most recent reply
taxes after short sale.
If I do an a to b then a b to c short sale with my LLC being the B and I don't receive proceeds from this transaction how can I avoid being taxed? Once again I wouldn't receive any money from this deal just trying to help a friend as he needed to switch the buying company.
Most Popular Reply
OK, that sort of makes sense. Don't know why they would approve your LLC buying it and not your friends. I assume then, that there is no relationship at all between your friend, the seller or the end buyer or between the seller and end buyer.
You will only have to deal with to the extent it flows through your taxes. You will have to supply EIN (and maybe SSN) information to the title company and then you will have to account for where the money went. So, shouldn't be any taxes on your part and there will be taxes for your friend.
Not a CPA. Consult yours on the details. If you're used to doing your taxes with turbotax or some such, you probably won't do that this year.
I'd not do this for free. It sounds like you want to let your friend collect all the profits despite him not being involved (legally, I mean) with the transaction at all. Its your LLC that is granting a warranty deed to the end buyer. If there is ever any title problem, its YOU the title company will come after, not your friend. Should it turn out there is anything untoward happening, perhaps something undisclosed to you, this could cause you trouble in the future. Its entirely possible the bank is just being silly when they won't approve a sale to his LLC but will to yours. But its also possible the bank knows something you don't. Or that the bank cares about something you've been told is no big deal.
You're getting in the middle of a big deal, taking some risk, and appear to be getting nothing out of the deal. Lots of things that can go wrong here. If the C buyer fails to perform after you have completed the A-B transaction, you'll own a house I suspect you really don't want. I just can't shake the feeling there's more to this story.