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Commission on puchase of Principal Residence

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    #1

    Commission on puchase of Principal Residence

    I have a client who owns a RE broker firm. He purchased a home (his principal residence) in 2008. His firm (sole member LLC, with him as only active agent) was paid $10,000 as real estate commission on the transaction.

    Would this be considered income to his brokerage or perhaps a reduction in his basis in his home?

    I guess it's the seller paying the commission not himself but it just seems a little odd...thoughts?
    Last edited by equinecpa; 03-30-2009, 02:15 PM.
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    #2
    I would say it's ordinary income. It's not self dealing since the seller paid him and the fact that the commission was generated from the purchase of his home shouldn't make any difference.
    In other words, a democratic government is the only one in which those who vote for a tax can escape the obligation to pay it.
    Alexis de Tocqueville

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      #3
      I agree with the Man from Lincoln, NE on this one...

      DavidO is correct. Its SE income but I believe the $10K is still included in his house cost basis.

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