How do I handle taxes with a fix and flip with a partner?

[Ryan Nodurft]

I am about to close on a fix and flip with a partner who is putting up half of the money. We didn't form an LLC before the purchase, so the house is in my name. When we sell how do I accurately split the profits to account for taxes?

Price:$87,000

Rehab: $30,000

ARV: $160,000

[Jake Hottenrott]

@Ryan Nodurft, congrats on your first fix and flip!  Hopefully it is as profitable as your hoped.

The basics of your transaction are to take the profits, less rehab and basis and each take 50/50.  (I'm sure you knew this).  From a tax perspective, you'll need to determine if a 1099-S will be issued to either of you at the time of sale for transaction.  If so, the one receiving the 1099-s will need to 1099-misc to the other partner.  You'll each report the sale and your share of expenses on your 2019 return.

As a CPA, I wholly recommend finding a tax professional that you can work with as you grow and can provide advice for you through this, your first transaction, as well as going forward.  A tax expert will be worth their fee in tax savings as well as headaches that they prevent for you!  Best of luck and congrats again!