All Forum Posts by: Eamonn McElroy

Affidavits are generally not admissible in court as they are considered hearsay.  Furthermore, an affidavit cannot be cross examined.  The roofer would need to testify under oath in court.

It's also considered a big no-no to offer compensation in return for an affidavit.  Affidavits should be freely given.  There shouldn't be any quid pro quo involved.

If a demand letter was sent, it's time to contact your attorney.  Based on your OP that's what it sounds like it was.

Good luck.

The way that I'll explain the concept, from a high level, would be that the dwelling unit would need to be disposed proximate to the sale of the land that is subjacent to the dwelling unit if the gain on the sale of the land is to be excluded under Sec 121.  A demolition is a disposition for zero dollars of consideration, and I am comfortable with the position that if a dwelling unit is demolished or destroyed, and the subjacent land is sold thereafter within the time confines of Sec 121, the land qualifies for the Sec 121 exclusion as long as the prior dwelling unit would have met the ownership and use requirements under Sec 121 notwithstanding the demolition or destruction.  There's really more to it than that, but it would take 10-15 minutes worth of talking to fully explain, which is a little too much for a forum post.

The sale or exchange of the dwelling unit requirement that you're reading in both the majority and the dissent of Gates is in effect an anti-abuse rule to prevent someone from engaging in behavior such as: buying land, putting a mobile home on it, then moving the mobile home to a new lot and selling the old lot every couple of years while utilizing the Sec 121 exclusion on each lot sold.  In that situation, the dwelling unit is never disposed, and that is the essence of the dynamic you're trying to examine.

Now, with the situation at hand, you're talking about a lot more than just scrapping the mobile home, so the optimal answer given the facts and circumstances would depend on a conversation with a tax advisor who excels in this area.  And I'd reiterate, that if you want to keep things simple, just sell it as-is for the lower price.  That's less risk and higher probability that the property qualifies for the Sec 121 exclusion.

Again, it's my opinion that the majority in Gates is offbase.  That they got it wrong.  It happens, that's why we have appeals.  The dissent is really the best part of that case.  But even then, Gates is distinguishable on its face from the facts in your OP.  You're not going to find the answer for your situation in Gates, just the overarching remedial intent of Sec 121.

The Gates case was appealed but never made it to trial.  One could assume it was settled out of court.  That should tell you something...

My firm has taken the position that the majority decision in Gates is non-authoritative and the dissenting opinion should be given weight.

Land that was subjacent to a dwelling unit used as a principal residence could very well qualify for the Sec 121 exclusion.  But there's a lot of factors to be weighed and things can get complicated pretty quickly.

If the OP wants to avoid complication, just sell the property as-is for the $170k.  Probably a lot less work and the exclusion is clear.

@Steven Emilio

Generally you wouldn't retain a tax attorney unless you're going to tax court.

A tax CPA or EA would be more useful to handle tax prep and planning.

Add @Dave Foster to your short list of QI candidates to interview, he's in FL but can work remotely.

I would agree that your friend will most likely need to pony up and pay an attorney.

This is a good read.  As I'm not an attorney, I can't comment on the accuracy of the article.  Good luck to your friend.

https://nationalevictions.com/...

A business will generally have two address on file with the SoS.  The first is the regular business address and the second is the registered agent's address.  What you're probably trying to convey is that your personal address was used as your regular business address.

Generally, you shouldn't use the registered agent's address as the regular business address if you are paying a third-party registered agent, as they usually have a limit on pieces of mail received per month or per year and charge for pieces of mail received in excess of that.  The registered agent serves a very narrow purpose.  Their purpose is to accept service of process or legal notices on behalf of your business.

If you're not comfortable listing your personal physical address as your business address.  You may be able to use a PO box for privacy, and that's what most individuals would do.  Open up a PO box and use that.

The holistic view is important.  There are non-tax considerations, especially so in the current environment.

I'm hearing from my clients that it's very difficult to get contractors on the job and they're charging an arm and a leg because they all have an incredible backlog of work.

In the current environment, I'd say the less risky path is to acquire a property without deferred maintenance and do a cost seg if it is beneficial.

Most savings accounts will yield 0.3-0.5% in the current interest rate environment.  If you're okay with a little more risk, a bond index ETF with a very low expense ratio might make sense.  Short-term will have less volatility than intermediate or longer term, with the trade-off of lower interest.

You can amend open years to correct the basis and depreciation.  For the closed years you can't amend.  When you go to sell you'd need to figure your depreciation taken on to calculate your 1250 gain.

Are you sure the juice is going to be worth the squeeze?  Has your CPA run a projection with the sales price being allocated based on square footage?

Might be time for a change if your CPA isn't well versed in these matters.

Any reasonable allocation method is fine.

We usually use square footage to allocate basis if there are different units, but per unit might be fine if there are a lot of units and they are all roughly the same size, give or take.  If there is a large variation, like in your example, square footage is generally more appropriate.