My uncle and I bought a building together and after a minor renovation we're flipping it for a decent profit
We're 50/50 partners on the project (we contributed equal shares of the capital/expenses and we'll take an equal share of the profit).
My name alone is on the title and all other documents. This was done in part because we wanted to save money setting up an LLC and partly because he is not a US citizen (he's Canadian)
Our initial thought was to have all the proceeds come to me, have me declare all the income on my personal income tax, and I will cut him a check for 50% of the post-tax gain
Accountants I've spoken with seem nervous about this setup. One fellow said it could trigger an audit. Another fellow said it could result in my uncle getting taxed again on his profit (even though I'd have already paid tax on them)
I'd appreciate any suggestions on how we should handle the situation to minimize our risk of audit, double taxation, or other issues
Thanks so much in advance!
Graham
