How does the IRS tax an Acquisition Fee?

[Brian Adams]

I recently closed a 240 unit deal and in my deals as the syndicator, I received an acquisition fee for putting the deal together.

My background is a CPA so I feel I have a pretty good understanding on how the fee should be taxed. 

I was recently speaking with a fellow investor and they were treating the fee a bit differently than me.

So curious to know from the BP expert community how your acquisition fee has been taxed?

[Brandon Hall]

@Daniel G. it depends on what side of the transaction you are on. If you are receiving the acquisition fees, it's treated as ordinary income. Receive these fees in an S-Corp if significant. 

If you are paying the acquisition fees, they are added to the basis of the property and depreciated just like all acquisition costs would be.