Interesting Scenario

[Pat L.]

Our 401(k) solo holds a 50% 1st position note on an investors rental SFH.

We are taking it back DIL for mtg arrears. With a little rehab it will sell for a good $25-$30k above the balance owed.

My TAX interpretation of the 'deal' is the following.....

-: the property was & remains an arms length transaction.

-: title to the property would now be assumed by the 401(k) solo due to the default of the note & the subsequent execution of the DIL.

:- now the profit from the eventual sale of the property should be held tax free in the 401(k) solo for future disposition.

am I Correct ???

(I couldn't for the life of me get the @ to work for Steve Hamilton et al)

[Bill Gulley]

P, rather hard to follow the comment out of context by the CPA, but let me catch up, 401k loaned the money, borrower walks, you (K) gets DIL, it will be treated as I mentioned. You'll adjust the basis on the next sale the profit will be in the K, profits will be deferred, not tax free but deferred as I understand it. :)