Basis

[RNuse09]

Client who was partners in a property with someone. She put up no money in the transaction. She just put work into it. She sold her her part to her partner for 15,000. Anyway I can come up with a logical basis, I hate to have this hit the sched c. Would it be on sched D, with a 0 basis? She has never takinen depreciation on this property. She is a real estate agent and her name is on the property. Thanks in advance for any help.

[ChEAr$]

Client who was partners in a property with someone. She put up no money in the transaction. She just put work into it. She sold her her part to her partner for 15,000. Anyway I can come up with a logical basis, I hate to have this hit the sched c. Would it be on sched D, with a 0 basis? She has never takinen depreciation on this property. She is a real estate agent and her name is on the property. Thanks in advance for any help.

First thing you do is to get a copy of the partnership agreement and look it over. It should specify how profits/losses are split.

[Burke]

No way can she take basis unless there was cash or property contributed in the deal. Does she classify as a dealer? That is the distinction between Sche C and Sche D. Or if it was a sale of a formalized partnership interest.

[RNuse09]

I was thinking

I think she should include the income on sched c. From the taxbook it says that prioperty received for services's basis is equal to the fmv of the services provided. So I think it should be included on sched c and then should be on sched d where there would be no gain or loss. What do you think?

[Burke]

Well, I don't think it can go on both. Sche C is treated as inventory (i.e, dealer) subj to SE tax, and Sche D is sale of a capital asset. Chear$ had a point. Is there a partnership agreement in all this? Written? And she better have some good documentation to calculate that "basis."