All Forum Posts by: Bill Walston

Sure, you can do that.  The purchase was effective when the deed was signed and delivered to you.  It was not contingent on the recording of the deed.

The trustee should have the authority to direct how the proceeds are to be disbursed.  Like @Joe Homs said, have the closing agent make the check payable to the beneficiary.

@Justin Cooke, the third edition of this book in nearly 10 years old and the tax laws have changed significantly during that time.  @Linda Weygnt is spot on.  DDB is allowed for cost segregation.  And don't forget - depreciation isn't allowed until the asset is completed and put into use.

AGREED!!! LOL

@Denise Evans, thanks for the clarification.  I inferred that you were suggesting Byram was typical to wholesale deals.  That is the problem, sometimes, of forum communication - context can be lost.  Sorry about that :)

 True enough Percy.  It's a matter of filing a Form 990-T and paying income taxes at the corporate rate. And estimated taxes should be paid during the year if the tax is expected to exceed $500.  So the income wouldn't be shielded from income tax, and since that was the question posed by the OP I answered that an SDIRA wouldn't be an option.  (NOTE:  It WOULD be a source of the cash for the purchase.)  

 Percy, do you mean have the SDIRA purchase the property?  I think the SDIRA is not an option in the case of a flip or rehab due to UBIT issues.

Actually @Denise Evans, that wasn't the decision of Byram v. Commissioner at all.  The case DID mention that Byram sold 22 properties in three years, but only SEVEN properties were at issue in the case, not twenty-two.  And I certainly don't find the facts of Byram applicable to typical wholesalers and rehabbers.

First,  the typical wholesaler or rehabber purchases property with the intent to assign for a quick profit or to "fix and flip" for a profit.  That wasn't the case of Byram who held six of the seven  properties from periods ranging from six to nine months, the seventh was held for over two years. That time period, in and of itself, would imply that the property was bought to hold for investment purposes.

Second, not only did Byram not list the properties with brokers, he didn't even advertise the properties for sale. All of the transactions were initiated by the purchaser or someone acting for the purchaser. Again, this is totally atypical of wholesalers and rehabbers and could be interpreted as intent to hold the property for investment. 

Attempting to use Byram to support a theory that the typical fix and flip can be reported as an investment and not as business income is quite a stretch.  Just sayin' :)

Yes.  The commission is considered a selling expense and is deducted from the sales price when computing the gain or loss on the sale.

Katharine, the usual income from a note is interest income.  It's considered portfolio income for tax purposes and is taxed at ordinary rates.  Unless you invest in notes as a business, the income received is not subject to self-employment taxes.  If the note is sold the income would be proceeds from the sale of an investment and would be taxed at capital gain rates - either short  or long term.  The same would be true of income received from a fund that invests in notes.  You should receive tax information from the fund informing you of the "type" of income distributions you received during the tax year.

Hope this helps.