Spec House

[RLymanC]

Two guys' decide to built a spec house togeather. No 1065

House is sold and title company splits 1099-S.

Both split cost basis. Each will file their own tax return. No 1065,,,,no K-1.

Question:
Report the sale on Schedule D,,,,,or form 4797?

Would schedule C along with Form 4797 be appropriate??

One of the parties had more expenses than the other (mileage, tools, rental equipment, etc. would this justify a larger cost basis for one party over the other?

[jainen]

prepare their tax return

What do you mean, "No 1065"?

What exactly do they want from you, if not to prepare their tax return?

[S T]

Partnership

Sounds like a 1065 to me. If agreement allows, then they can claim unreimbursed expenses on Sched E.

Sandy

[Gretel]

I agree, 1065 should be filed. Since sale is done deal and seemingly reported under individuals SS#'s you probably need to do some reporting on their 1040's as well,in addition to the K-1.

[RLymanC]

1065

Somewhere I recall that the IRS does not require a partnership return on small joint venture such as this. Does anyone know for sure on this.

If that is the case I believe filing on schdule D would be the way to go, and report 1/2 the amount of 1099-S and calulate the cost basis based on each person.

[Matt Sova]

Sched D?

How do you complete a schedule D for a business transaction? Either this is a business, which, I agree should go on 1065, or the 1099-S goes on line 21 subj to SE tax with all expenses on Schedule A subject to 2%. If they refuse the 1065 you may be able to do a Schedule C reporting the 1099-S as income and all expenses with the net income being subject to SE tax.

[geekgirldany]

On TTB Page 20-3 It describes about electing out of partnership treatment. Your client/s might fall under Investing Partnerships.

[JoshinNC]

this isn't an investment

an invesment would be buying an investment and holding it, while speculating that outside market forces would drive up the cost.

these guys formed a home building partnership and now want to skirt the law. I would tell them 1065 or leave my office, no exceptions.

TP's that make decisions prior to receiving competant advice are asking for trouble and then want to blame you for not telling them beforehand (as though you could read their minds). Don't need headaches like this, especially this time of the year.

It's a business, it's a partnership, it needs a 1065. Period.